Skip to main content

Full text of "Brief of arguments against public ownership"

See other formats 


t«^ 


ilCi 

A£l£ob 


ijiitric-.'n  l(.le-l.one  ano   iGlcgrs.^h  lj. 

Briefs  of  nrjutuonts  against 
ablic  ji.nership. 

3uppl . nos . 4, 6, 8, 3, 3a, £1, £3, £5a, 

7'^    •  ■  7    W. 


\ 


I 


^Jv  » 


Reprinted  from  the  North  Amerioan  Review  for  Marchy^1»l^.-^' '  '   U»  ^  ^ 
Copyright,  191S,  by  the  North  American  Review  Publishing  Company. 


Public  Ownership  in  France 

By  Paul   Leboy-Beauueu, 
Professor  of  Political  Economy  at  le  College  de  France. 


The  question  of  Public  Ownership,  called  in  France 
the  ^tatusation  or  the  municipaiifaiion  of  Public  Util- 
ities, has  been  to  the  fore  in  that  country  for  the  past 
quarter  of  a  century.  The  Goveriunent,  Parliament, 
and  public  opinion  have  been  continually  examining  the 
subject,  and  in  recent  years  interesting  experiments 
have  been  made  in  this  field. 

In  France,  for  more  tlian  a  century,  the  State  has 
had  the  monopoly  of  certain  great  industries.  This 
monopoly  was  constituted  either  for  fiscal  reasons,  in 
order  to  bring  large  sums  of  money  into  the  public 
treasury,  or  for  reasons  of  public  safetj',  in  order  to 
strengthen  the  military  position  of  the  country.  In 
this  connection  I  will  not  take  up  the  Post  Office, 
which,  tinder  the  ancient  regime,  was  farmed  to  a 
company  of  financiers  and  which,  since  the  end  of 
the  eighteenth  century,  has  also  been  a  Government 
monopoly — the  system  now  adopted  in  most  countries. 
To  the  Post  Office  was,  later,  united  the  telegraph,  and, 
some  twentj--five  years  ago,  the  telephone  also.  In 
addition  to  these,  the  French  State  also  enjoys  two  other 
important  fiscal  monopolies — the  manufacture  and  sale 
of  tobacco  and  matches. 

The  first  of  these  two  monopolies,  tobacco,  is  more 
than  a  century  old,  having  been  taken  over  by  the 
State  at  the  very  beginning  of  the  nineteenth  century. 
In  accordance  with  its  stipulations  French  agricultural- 
ists may  not  raise  tobacco  except  in  certain  special  cases 
and  then  in  a  very  small  number  of  departments.  Fur- 
thermore, they  must  be  provided  with  a  Government 
permit,  and  the  cultivation  is  supervised  by  the  agents 
of  th"  fisc.  who  enumerate  the  plants,  count  the  leaves, 
and  then  buy  the  crop  at  a  price  fi.xed  by  the  Govern- 
ment. The  tobacco,  whether  raised  in  France  or  bought 
abroad,  is  manufactured  in  a  limited  number  of  fac- 
tories owned  by  the  State,  whence  it  is  sent  to  depots 
tinder  Government  directors,  where  it  is  finally  dis- 
tributed among  the  retail  dealers,  some  30,000  in  num- 
ber for  the  territory  of  France,  who  are  appointed  by 
the  Government  and  who  sell  the  different  qualities  of 
tobacco  at  prices  authorized  by  the  Government.  As 
these  prices  are  very  high,  the  monopoly  turns  in  a 
large  «nm  to  the  national  treasury.  The  gross  receipts 
reach  in  round  numbers  500,000,000  francs,  netting 
400,000,000,  the  total  expenses  being  only  about  one- 


fifth  of  the  sale  price.  The  French  people  are  now 
accustomed  to  this  monopoly — in  operation  for  over  a 
hundred  years — having  been  established  in  France  at  a 
moment  when  the  consumption  of  tobacco  was  very 
small  and  the  production  still  smaller,  for  nearly  all 
the  tobacco  was  imported.  The  enormous  fiscal  advan- 
tages derived  from  this  monopoly  also  tend  to  render 
it  less  unpopular,  tiiough  complaints  are  common  con- 
cerning the  bad  quality  of  French  Government  tobacco, 
and  because  tlie  retail  dealers  have  not  always  in  stock 
the  exact  kind  of  tobacco  wanted  by  the  purchaser,  who, 
knowing  that  he  will  have  to  wait  several  days  to  get 
what  lie  asks  for,  accepts  what  is  offered.  A  graver 
inconvenience  came  out  in  1910  and  1911.  In  addition 
to  the  monopoly  of  tobacco,  the  Government  is  also  the 
only  producer  of  nicotine.  Now  it  so  happens  that 
nicotine  is  very  efficacious  in  destroying  insects  harm- 
ful to  certain  plants  and  fruits.  During  the  two  years 
just  mentioned,  the  Mediterranean  portion  of  the  French 
\-ineyards  was  attacked  by  a  species  of  scale  insect  which 
wotdd  penetrate  into  the  grape  and  devour  all  the  juice. 
So  the  vitieulturalists  suddenly  needed  a  large  quantity 
of  nicotine  with  which  to  fight  this  insect.  But  on 
account  of  the  routine  and  lack  of  suppleness  which 
always  characterizes  Government  enterprises,  the  re- 
quired amount  of  nicotine  could  not  be  furnished.  The 
result  was  that  the  grape  crop  was  very  short  and  the 
vitieulturalists  lost  several  tens  of  millions  of  francs. 

The  Government  match  monopoly  is  less  important. 
It  has  existed  for  only  some  thirty  years  and  brings 
into  the  State  Treasury  about  40,000,000  francs  gross, 
or  about  30,000,000  net,  the  sale  price  being  about 
quadruple  the  cost  price.  Every  Frenchman  and  every 
foreigner  visiting  France  knows  the  exceedingly  bad 
quality  of  the  French  Government  match.  Sometimes 
you  have  to  strike  a  half-dozen  before  one  will  light. 
In  1910  the  Government  tried  to  stop  the  making  and 
the  sale  of  vest-pocket  tinder-boxes,  even  taking  legal 
proceedings  against  those  who  sold  them  or  used  them. 
The  pressure  of  public  opinion,  however,  stopped  this, 
and  the  Government  had  to  content  itself  with  putting 
a  high  duty  on  them.  Before  the  match  industry  be- 
came a  monopoly  several  millions'  worth  of  French 
matches  were  exported  annually;  but  the  business  is 
now  completely  dead.     The  same  thing  is  true  of  the 


^ 


Pul 


r 


tobacco  industry ;  though  the  Government  sells  500,000,- 
000  francs'  worth  of  tobacco  to  its  own  citizens,  its  ex- 
port trade  is  next  to  nothing. 

Powder  for  the  army  and  navy,  as  well  as  for  mining 
and  sport,  is  another  Government  monopoly  in  France. 
The  aim  in  this  case  is  not  financial;  but  a  pretended 
military  and  national  interest  was  given  out  as  the 
reason  for  this  monopoly  when  it  was  established  at  the 
beginning  of  the  nineteenth  century.  The  system  has 
always  been  a  cause  of  much  complaint  from  the  mining 
interests  and  sportsmen.  Leaving  the  army  and  na\7 
out  of  the  account,  the  Government  sells  the  French 
public  from  twenty-two  to  twenty-three  millions'  worth 
of  powder  a  year.  The  terrible  disasters  in  the  French 
navy — when  the  ironclad  Jena  wa«  blown  up,  and  but 
a  few  3'ears  later  the  Liberie — are  attributed  by  a  deeply 
moved  public  to  the  bad  quality  of  the  powder  in  the 
ships'  magazines.  An  official  investigation  has  revealed 
the  most  crying  abuses  and  the  greatest  negligence  in 
the  management  of  some  of  the  Government  powder 
depots.  In  fact,  the  pressure  of  public  opinion  has  led 
the  Cabinet  and  Parliament  to  examine  the  question 
of  what  restrictions  can  be  placed  on  the  Government 
manufacture  of  powder,  and  has  brought  about  the 
authorization,  under  certain  conditions,  of  the  manu- 
facture and  sale  of  powder  through  private  enterprise. 

Though  the  French  State  has  not  made  a  monopoly 
of  the  building  of  war-ships  and  the  furnishing  of  all 
the  necessary  supplies,  still  a  large  part  of  this  work 
is  done  in  the  Government  3'ards,  which  give  perma- 
nent work  to  some  30,000  men.  In  1908  Senator  Poirier, 
of  the  Finance  Committee  of  the  Upper  House,  made  a 
report  on  the  working  of  these  State  arsenals.*  These 
potent  facts  concerning  the  French  State  industries 
have  often  been  pointed  out  to  Parliament,  and  espe- 
cially to  the  Senate,  by  M.  Antonin  Dubost,  now  Presi- 
dent of  that  distinguished  body. 

It  is  not  superfhinus  to  say  here  a  few  words  about 
one  of  the  most  recent  French  State  monopolies — the 
telephone.  The  complaints  under  this  head  are  uni- 
versal. In  the  first  place,  the  tariff  is  very  high — 100 
■francs,  or  nearly  $80  a  year  in  Paris,  the  aim  of  the 
State  being  to  get  out  of  it  as  much  as. possible — 40,- 
000,000  francs  gross.  But  this  is  not  the  only  thing  to 
criticize.  The  apparatus  is  antiquated  and  the  em- 
ployees incapable.  As  a  rule,  it  takes  many  minutes  to 
get  a  communication  in  Paris,  and  when  you  would 
converse  with  other  cities,  even  when  they  are  not  far 
apart,  the  best  plan  is  not  to  try. 


*  In  my  volume  CoUecUvismc,  flftU  edlHon,  pages  073  to 
08.^,  I  linvp  oxnmliiod  this  report  In  detail :  but  suffice  It  to 
give  here  one  single  sentence,  a  rf-sunie  of  the  whole:  "In 
the  military  posts  and  arsenals  the  waste  of  the  public 
funds  Is  simply  beyond   Iniaglnntlon." 


As  regards  wireless  telegraph)',  the  subject  may  be 
dismissed  in  verj-  few  words:  it  is  going  to  be  a  State 
monopoly,  too,  and  so  the  French  public  does  not  yet 
enjoy  the  benefits  of  this  new  discovery. 

Another  and  very  striking  example  of  the  mediocre 
ability  of  the  State  in  industrial  matters  is  furnished 
by  the  Public  Printing  Office.  This  institution  came 
under  Government  control  before  the  Eevolution  of 
1789,  and  at  first  was  devoted  exclusively  to  the  print- 
ing of  works  in  the  Oriental  languages  for  which  pri- 
\ate  concerns  had  neither  the  type  nor  the  knowledge, 
so  there  was  ground  for  such  a  plant.  But  little  by 
little  during  tlie  nineteenth  century  the  functions  of 
the  National  Printing  Office  were  extended  until  it 
became  transformed  into  an  ordinary  printing  estab- 
lishment doing  all  sorts  of  work,  and  doing  it  in  such 
a  wasteful  manner  that  the  whole  subject  has  been 
brought  before  Parliament.  The  heiglit  of  the  scandal 
was  reached  when  it  was  decided  to  reconstruct  a  part 
of  the  building  of  the  Printing  Office,  tliis  work  to  cost, 
according  to  the  original  estimates,  2,700,000  francs. 
At  the  end  of  1910,  however,  it  was  found  that  12,000,- 
000  had  already  been  spent  and  5,300,000  more  would 
be  required  to  complete  the  work,  making  a  total  of 
17,300,000  instead  of  2,700,000  as  originally  called  for. 
That  is  to  say,  the  work  was  going  to  cost  more  than 
six  times  what  had  been  stated  in  the  estimates.  So 
an  official  investigation  into  the  whole  general  manage- 
ment of  the  Public  Printing  Office  was  set  on  foot, 
when  it  was  found  that  for  the  1,300  printers  employed, 
there  were  172  officials  and  superintendents  of  one  kind 
and  another — that  is,  one  for  every  eight  workmen. 
Among  these  officials,  135  belonged  to  the  director's 
department  alone,  one  for  less  than  every  ten  workmen, 
whereas  in  a  private  establishment  of  the  same  im- 
portance there  would  be  one  for  every  thirty-four  work- 
men— that  is,  four  times  less.* 

If  we  take  up  the  State  railway  system  of  France  we 
find  all  these  shortcomings  on  a  still  larger  scale.  Prior 
to  1875,  there  were  no  railways  of  this  kind  in  France. 
The  plan  generally  adopted  in  France  has  been  a  con- 
cession to  a  private  company  for  a  period  of  ninetv-nine 
years.  For  some  of  these  companies  a  little  more  than 
half  of  the  concession  has  now  expired,  and  for  others 
nearly  one-half.  At  the  end  of  this  period  of  ninety- 
nine  years — that  is,  between  1950  and  1960  for  the 
principal  companies — the  railways  will  revert  to  the 
State,  which  does  not  mean,  however,  that  the  State  will 
have  to  take  over  their  management.  The  State  can 
then  make  a  new  concession  on  more  advantageous 
terms  for  it  and  for  the  public,  because  if  not  all,  at 


•  Journal  Offlciel.  November  25,  1010 ;  Journal  des  Dibats, 
Novonibor  2fi,   1910. 


least  the  largest  part  of  the  capital  used  for  the  buildiog 
of  the  roads  will  have  been  liquidated  by  the  redemp- 
tion, which  the  companies  make  every  year,  of  a  part 
of  their  shares  and  bonds.  In  France  the  State  origi- 
nally aided  in  the  building  of  its  railway  system  by 
moderate  money  subventions  and  by  guaranteeing  the 
payment  of  the  interest  on  the  capital  used  for  the 
building  of  the  secondary  lines.  The  development  of 
traffic  and  of  net  profits  has  generally  made  it  unneces- 
sary for  the  companies  to  have  recourse  to  this  plan  of 
guaranteed  interest,  and  the  principal  companies  have 
already  paid  back,  or  will  eventually  be  able  to  pay 
back,  the  sums  advanced  by  the  State  for  this  purpose. 

Thus,  in  the  original  plan  of  the  French  railway  sys- 
tem the  State  took  no  part  in  the  management.  About 
the  year  1875,  circumstances  threw  into  its  hands  a  line 
which  at  first  was  not  of  verj'  great  importance;  some 
small  companies  in  the  western  part  of  France,  between 
Bordeaux  and  Xantes,  failed  or  got  into  financial  diffi- 
culties, and  the  State,  in  order  to  preserve  the  share- 
holders from  complete  ruin,  did  what  was  not  at  all 
necessary — bought  up  the  line  belonging  to  these  small 
companies,  and  instead  of  passing  it  on  to  a  large  and 
flourishing  company  decided  to  manage  the  line,  at  least 
provisionally.  But  this  temporary  arrangement  finally 
became  a  permanent  one,  and  gradually  the  line  was 
lengthened  until  it  reached  Paris,  so  tlwt  there  came 
to  be  in  western  France  a  line  linking  the  capital  with 
Bordeaux  and  Nantes.  This  line,  known  as  "the  old 
State  railway,"  is  now  about  3,000  kilometers  in  length, 
thus  forming  about  a  sixteenth  part  of  the  total  length 
of  the  whole  French  railway  system.  The  running  of 
this  road  is  very  expensive.  Its  net  revenues  do  not 
represent  two  per  cent,  on  the  invested  capital.  It  has 
had  some  terrible  accidents  of  late,  costing  the  lives  of 
scores  of  passengers.  The  last  one  was  due  to  the  bad 
condition  of  a  bridge  over  the  Loire;  the  weakness  of 
this  bridge  had  been  common  report  for  a  long  time. 

In  1908  the  State  added  to  its  small  system  a  much 
larger  network  of  railways  by  taking  over  the  important 
Western  Company,  which  controlled  the  roads  of  Brit- 
tany, Normandy,  and  some  neighboring  departments, 
and  which,  starting  at  Paris,  had  as  termini  the  sea- 
ports of  Havre,  Cherbourg,  Brest,  and  Nantes.  This 
system  embraces  about  6,000  kilometers  and  brings  up 
the  total  of  the  State  roads  to  9,000  kilometers,  or 
nearly  a  fifth  of  the  whole  French  system  of  railways. 

For  a  long  time  the  Radical  party,  which  has  been 
in  power  in  France  from  1898  to  1911,  inclusive,  has 
favored  the  policy  of  taking  over  the  railways  and  hav- 
ing them  managed  by  the  State.  This  was  one  of  the 
planks  of  the  Badical  platform  as  far  back  as  1889. 
The  Conservative  part}',  on  the  contrary,  has  always 
opposed  this  idea.     The  Ministers  of  Finance  of  the 


Third  Republic,  who  have  left  the  best  names — M.  Leon 
Say  and  M.  Maurice  Rouvier — always  combated  the 
proposal,  whose  tinancial  and  economic  consequences 
they  held  would  prove  to  be  most  disastrous.  In  1908 
tlie  Clemenceau  Cabinet,  in  which  M.  Caillaux  was 
Minister  of  Finance  and  M.  Barthou,  Minister  of  Pub- 
lic Works,  took  over  the  management  of  the  Western 
Company  in  the  name  of  the  State,  notwithstanding  tlie 
almost  unanimous  disapproval  of  the  measure  by  the 
representatives  of  tlie  region  directly  atlccted  and  the 
protests  of  nearly  all  of  the  French  Chambers  of  Com- 
merce. The  bill  was  carried  through  the  Chamber  of 
Deputies  without  much  trouble,  but  in  the  Senate  it 
required  a  threat  of  a  Cabinet  crisis  to  obtain  the  small 
majority  finally  secured;  and  during  the  debate  these 
ministers  just  mentioned  repeatedly  assured  the  recal- 
citrant senators  that  the  transaction  would  cost  the 
French  Treasury  nothing,  that  it  would  be  an  operation 
blanche,  as  the  net  receipts  of  the  lines  would  cover  the 
indemnity  which  had  to  be  paid  the  company.  Now, 
the  State  began  its  management  in  January,  1909 — 
that  is,  four  years  ago,  long  enough  for  us  to  draw 
some  conclusions.     And  what  is  the  result? 

The  State  management  of  the  Western  Railway  has 
been  from  the  very  start,  and  continues  to  be,  a  great 
financial  and  technical  disappointment.  For  the  first 
two  }'ears  the  whole  line  was  in  absolutely  chaotic  con- 
dition. The  trains  were  never  on  time  and  the  worst 
possible  accidents  were  continually  happening,  whereas 
imder  the  old  management  not  a  single  passenger  had 
been  killed  in  ten  years.  After  many  experiments,  the 
new  management  was  forced  to  reduce  the  number  of 
trains  and  cut  down  the  speed  of  the  principal  ones. 
To-day  the  technical  side  is  better  than  it  was  at  first, 
but  not  better  than  it  was  under  the  old  company. 
The  financial  results,  however,  could  not  be  much  worse 
than  they  are,  and  are  a  great  load  on  the  State 
Treasury. 

In  the  year  1908,  the  one  preceding  the  operation  of 
the  road  by  the  State,  the  old  Western  Company  had  a 
net  deficit  of  27,000,000  francs,  and  consequently,  in 
accordance  with  the  plan  then  in  force,  the  company 
borrowed  from  the  State  this  sum  with  which  to  pay  the 
interest  on  its  bonds  and  shares.  In  1909,  the  first 
year  that  the  State  had  control  of  the  roads,  this  deficit 
ro?e  to  38,500.000  francs,  and  continued  to  rise  as  fol- 
lows during  the  succeeding  years:  1910,  58,500,000; 
1911,  71,250,000;  1012,  estimated,  84,500,000,  and 
1913,  estimated,  90,000,000  in  round  numbers.  While 
I  am  writing  these  lines  M.  Charon,  Deputy  and  a 
former  Assistant  Secretary,  publishes  a  report  on  the 
subject  in  the  name  of  the  Budget  Committee  of  the 
Chamber  of  Deputies.  He  belongs  to  the  Radical  party, 
but  has  to  admit  that  the  figures  of  the  estimated  deficit 


for  the  year  1913  are  "very  disquieting,"  and  adds  that 
the  estimated  deficit  for  1912,  as  well  as  that  for  1913, 
is  largely  attributable  to  salaries  of  the  employees,  the 
increase  under  this  head  being  52,000,000  francs  since 
the  State  took  over  the  road.  M.  Cheron  declares  that 
he  is  "not  accusing  anybody,"  doubtless  because  he 
knows  it  would  be  no  good.  He  says  he  might  be  will- 
ing to  accept  an  increase  in  salaries  and  wages,  but 
points  out  that  there  is  an  excessive  augmentation  in 
the  number  of  employees.  Here  are  his  exact  words 
on  this  point :  "As  regards  the  increase  of  the  per- 
sonnel, it  seems  to  me  the  administration  has  been 
rather  large.  But  the  same  thing  is  true  of  all  the 
departments."  And  then  he  concludes  with  these  words : 
"In  til  is  matter  of  the  augmentation  of  the  personnel, 
T  understand  it  has  reached  the  maximum."  This 
reflection  of  an  out-and-out  Eadical  Deputy  is  very 
characteristic.  In  the  Government  offices,  at  least  in 
France,  there  is  always  a  tendency  to  over-increase  the 
number  of  the  employed.  But  in  this  way  more  citizens 
are  made  happy,  and  tlie  party  in  power  fares  better  at 
the  elections. 

Tlius,  as  we  have  seen,  the  trial  of  State  ownership 
in  France  is  directly  against  that  system,  and  conse- 
quently public  opinion  is  now  completely  opposed  there- 
to, especially  enlightened,  as  it  now  is,  by  the  financial 
and  other  shortcomings  which  have  followed  the  State 
operation  of  the  Western  Railway.  It  may  be  regarded 
as  certain  that,  notwitli.standing  the  seventy  Socialist 
Deputies  in  the  Chamber,  it  will  be  a  good  many  years 
before  another  French  Minister  of  Finance  will  venture 
to  propose  the  State  taking  over  another  railway. 

The  municipalization  of  city  public  utilities,  such  as 
street-ligliting,  motive  power,  tramways,  etc.,  has  not 
gone  far  in  France,  thougli  it  has  many  supporters  not 
only  among  our  Socialists,  but  also  among  our  Radicals. 
As  most  of  the  concessions  for  gas,  electricity,  water, 
and  the  street-passenger  traffic  expired  in  the  early  years 
of  the  twentieth  centur}'.  it  might  have  been  thought 
for  a  moment  that  the  Paris  Municipal  Council  would 
have  municipalized  these  different  services.  But  notli- 
ing  came  of  the  very  artificial  movement  in  that  direc- 
tion set  on  foot  by  the  Radical  Socialist  party.  On 
the  contrary,  the  Paris  Municipal  Council  has,  during 
the  last  fifteen  years,  made  new  concessions  to  private 
companies  in  different  forms  and  for  varjnng  terms  of 
years  in  the  matter  of  all  the  services  just  mentioned. 
This  is  a  notable  fact,  for  it  was  done  though  munici- 
palization was  advocated  by  a  large  and  influential 
group  in  the  Council. 

The  concession  which  had  been  enjoyed  for  three- 
quarters  of  a  century  by  the  Paris  Das  Company  expired 
in  1905.  But  the  Paris  ^lunicipal  Council  declined  to 
assume  the  responsibility  of  directing  that  industry.  It 
preferred  the  system  by  which  it  became  simply  "an 


interested  party" — that  is,  the  gas-works  belong  to  the 
municipality,  but  the  making  of  the  gas  is  done  by  a 
company  which  furnishes  the  working  capital  and  wliich 
shares  the  profits  with  the  cit}'.  In  accordance  with 
this  arrangement,  the  city  may  end  the  concession  every 
five  years  by  giving  the  company  two  years'  notice; 
that  is  to  say,  the  city  is  bound  for  seven  years.  The 
first  period  of  five  years  expired  in  1910,  without  the 
city  making  use  of  this  right,  so  that  the  present 
arrangement  will  last  at  least  until  1915;  and  every- 
thing pointij  to  its  continuing  even  longer,  especially  as 
the  ilunicipal  Council  elected  in  19  la  for  four  years 
is  friendly  to  the  present  arrangement.  In  fact,  at  the 
moment  of  writing,  the  city  of  Paris  is  negotiating  a 
loan  of  200,000,000  francs  with  which  to  enlarge  its 
present  gas-works  and  even  to  build  new  ones  to  be  run 
under  the  present  concession. 

A  similar  arrangement — that  of  "an  interested  ad- 
ministration"" — e.\ists  with  the  General  Water  Company, 
and  in  1910  the  city  renewed  this  arrangement  for  a 
very  long  period. 

Some  thirty  years  ago  concessions,  beginning  with  a 
period  running  from  1882  to  1889,  were  granted  to  a 
half-dozen  companies,  each  being  given  a  fraction  of 
the  city,  called  a  secteiir.  These  concessions  had  to  do 
with  electricity,  heating,  lighting,  and  motive  power, 
and  all  will  ejcpire  in  1914.  Five  or  six  years  ago  the 
Paris  Municipal  Council  united  all  the  secteurs  and 
conceded  the  city's  electricity  and  motive  power  for  a 
period  of  twent}'-six  years — that  is,  from  1914  to  June 
;{0,  1940 — to  a  large  financial  group  called  the  Paris 
Company  for  Electrical  Distribution.  In  the  matter  of 
electric  lighting  and  heating,  this  company  has  a 
monopoly;  but  as  regards  electric  motive  power  the 
Municipal  Council  reserves  the  right  to  permit  other 
companies  to  furnish  electric  power  to  the  city.  Within 
the  last  few  months  a  grant  of  this  kind  has  come  up 
for  consideration,  so  that  in  this  matter  of  electric  power 
it  is  higlily  probable  that  the  city  of  Paris  will  adopt  a 
competitive  system. 

In  tlie  matter  of  urban  passenger  traffic,  the  munici- 
pality has  had  recourse  also  to  the  concessionary  system 
under  different  forms  and  conditions.  There  are  in 
Paris  two  distinct  subway  companies,  the  older  and 
more  important  being  the  Metropolitan,  whose  conces- 
sion is  for  forty  years  after  the  opening  of  the  last  por- 
tion of  the  road.  The  city  assumes  all  the  cost  of  tun- 
neling, the  company  making  the  roadbed,  building  the 
stations,  furnisliing  the  rolling-stock,  and  running  the 
road.  It  gives  the  city  one-third  of  the  gross  receipts 
and  a  certain  portion  of  the  increased  traffic  when  it 
surpasses  a  fixed  figure.  The  second  subway  company, 
the  North-South,  lias  made  a  different  arrangement 
with  the  city.  The  company  does  all  the  work  of  con- 
struction, the  city  simply  approving  and  supervising 


the  plans  and  their  execution  and  sharing  in  the  profits, 
this  share  being  based  on  the  number  of  passengers  car- 
ried.   This  concession  is  for  seventy-five  years. 

And  lastly,  the  citj'  renewed  three  or  four  years  ago 
for  periods  of  fifty  years,  with  large  shares  in  the 
profits,  its  concessions  to  all  the  tramway,  omnibus,  and 
auto-bus  companies. 

Thus,  from  1900  to  1910,  inclusive,  the  Paris  Munici- 
pal Council  has  been  handing  over  to  private  companies 
under  varying  conditions  for  periods  extending  to  1943 
and  even  to  1980,  all  the  urban  public  utilities — elec- 
tricity, water,  and  passenger  traffic,  as  well  as  gas,  on  a 
somewhat  ditferent  plan  as  explained  above. 

This  system  of  concessions  to  private  companies,  pro- 
ducing a  considerable  reduction  in  the  prices  paid  for- 
merly by  the  public  for  its  utilities  and  offering  the  city 
considerable  participation  in  the  profits,  is  now  both 
favorably  received  by  Parisians  and  very  advantageous 
to  the  city  treasury.  In  the  case  of  long  concessions, 
the  municipality  has  reserved  the  right,  on  certain  con- 
ditions, to  take  over  the  utility  at  the  end  of  a  fixed 
time,  generally  after  a  lapse  of  ten  or  fifteen  years. 
But  in  the  present  state  of  mind  of  the  municipality 
and  Paris  public  opinion,  it  is  not  probable  that  the 
city  will  exercise  this  power.  The  public  especially 
approves  of  the  plan  by  which  the  city  participates  in 
the  profits  derived  from  the  concessions.  At  the  recent 
municipal  election  in  May,  1912,  the  question  of  the 
municipalization  of  public  utilities  or  of  the  city  exer- 
cising its  reserved  right  of  taking  over  any  of  them  was 
not  brought  up  at  all,  and  almost  every  one  of  the  can- 
didates for  re-election  who  favored  this  system  was  suc- 
cessful at  the  polls.  If  one  or  two  of  these  were  de- 
feated, it  was  due  to  quite  other  and  personal  reasons. 

As  I  have  already  said,  this  system  is  very  beneficial 
to  the  Paris  treasury.  For  instance,  during  the  year 
1910  it  brought  in  83,000,000  francs,  of  which  34  to 
35  millions  were  from  gas,  27  to  28  from  water,  18 
from  the  subway,  and  the  rest  from  electricity.  The 
last  item  is  sure  to  increase  rapidly  and  considerably. 
It  is  true  that  these  83,000,000  francs  must  meet  the 
interest  on  large  loans  which  the  city  was  forced  to  have 
recourse  to  in  order  to  carry  through  some  of  these 
enterprises.  But  it  is  safe  to  say  that  interest  and 
amortizements  do  not  represent  more  than  one-half  of 
the  sums  which  the  city  receives  from  these  sources; 
and  these  sums  are  sure  to  increase  gradually  and  nota- 
bly. I  estimate  that,  toward  the  middle  of  the  present 
century,  150  or  perhaps  even  200  million  francs  will 
be  the  minimum  sum  which  the  city  will  derive  from 
these  urban  utilities  under  the  present  arrangement,  of 
which  sum  at  least  one-half,  if  not  three-fifths  or  two- 
thirds,  will  be  net  profit. 

In  the  matter  of  urban  utilities,  most  of  the  cities  of 


France  have  copied  Paris  more  or  less  closely.  The 
exceptions  are  those  towns  where  the  municipal  council 
is  Socialist  or  CoUectivist ;  in  which  cases  some  of  the 
utilities,  especially  that  of  lighting,  have  been  munici- 
palized. But  these  are  rare  exceptions  in  France,  and 
the  experiment  has  not,  as  a  rule,  been  a  success.  The 
city  of  Elbeuf,  for  example,  offers  almost  a  tragic  case. 
A  few  years  ago  the  municipal  council  and  the  mayor 
decided  to  municipalize  tlie  gas,  and  announced  their 
intention  to  extend  this  plan  to  various  other  indus- 
tries. But  their  initial  step  proved  most  disastrous,  and 
the  municipal  gas  company  was  run  at  a  marked  loss 
to  the  city  treasury.  The  mayor,  who  represented  his 
town  in  the  Chamber  of  Deputies,  was  so  affected  by 
the  situation  and  the  unpopularity  in  which  he  fell, 
that  he  actually  committed  suicide.  His  death  was  fol- 
lowed by  a  new  election,  when  the  victorious  municipal 
council  immediately  leased  the  city  gas  interests  to  a 
private  company. 

As  a  result  of  all  this,  -municipalization  is  not  in 
good  odor  just  now  in  France.  A  very  striking  proof 
of  this  has  recently  been  furnished.  In  consequence  of 
the  widespread  complaints  over  the  increased  cost  of 
living,  the  Caillaux  Cabinet  brought  in  a  bill  authoriz- 
ing the  Paris  municipality  to  establish  butcher-shops 
and  bakeries.  But  public  opinion  was  so  opposed  to 
this  project  that  the  Poincar6  Cabinet,  which  succeeded 
the  Caillaux  Cabinet,  promptly  withdrew  this  bill. 

It  is  true  that  the  city  of  Paris  has  decided  in  prin- 
ciple to  call  for  a  loan  of  200,000,000  francs  for  con- 
structing or  aiding  by  loans,  the  construction  of  cheap 
working-men's  homes;  and  that  the  Government  has 
introduced  a  bill  to  enable  French  towns  in  general  to 
do  this  same  thing.  But  the  bill  provides  that  the 
towns  must,  as  a  nile,  come  to  an  arrangement  with 
some  co-operative  or  ordinary  stock  company  to  whom 
will  be  loaned,  at  a  low  interest,  the  funds  necessary  to 
build  these  houses.  So  the  general  idea  of  the  bill  is 
that  the  municipalities  will  neither  construct  nor  man- 
age these  houses.  Even  tlie  ilinister  of  Labor,  M.  L^on 
Bourgeois,  who  belongs  to  the  advanced  Democratic 
party,  has  concurred  publicly  in  this  riew. 

I  repeat,  therefore,  that  State  ownership  and  opera- 
tion of  public  utilities,  that  municipalization,  that  the 
participation  of  the  departments  or  public  authorities 
of  any  kind  is  in  disgrace  in  France,  the  final  blow  to 
the  system  having  been  given  by  the  lamentable  failure, 
still  in  progress,  of  the  Western  Railway  management. 
And  I  may  add  that  a  careful  study  of  the  nature  and 
working  of  the  modem  State  and  public  bodies  to-day, 
especially  in  wholly  democratic  countries,  shows  that 
reasons  of  the  highest  theoretical  gravity  add  their 
weight  to  those  of  a  practical  kind  in  favor  of  the 
rejection  of  the  idea  of  State  operation  of  public  utili- 
ties of  any  sort.     But  my  contradictors  may  point  to 


Germany,  and  especially  to  Prussia,  as  a  proof  that  the 
State  can  operate  creditably  great  railway  systems.  My 
reply  is  that  Germany  and  Prussia  are  in  no  respects 
democratic  countries;  that  Prussia  is  not  even  a  Par- 
liamentary one,  subject  to  electoral  servitude  and  to  the 
instability  of  elective  administrations.  The  Prussian 
bureaucracy  is  very  strongly  organized,  quite  independ- 
ent of  Parliament,  an  autonomus  body  in  no  way  influ- 
enced by  the  sudden  changes  of  the  outside  world. 
Furthermore,  we  must  take  into  account  the  German 
character,  and  particularly  the  Prussian  character,  full 
of  discipline  and  deeply  imbued  with  the  military  spirit 
and  functionary  pedantism.  In  other  countries,  where 
these  conditions  do  not  exist.  State  railways  are  far 
from  being  above  criticism.  In  Belgium,  for  instance, 
which  is,  however,  a  very  industrial  and  prosperous, 
as  well  as  a  very  calm  and  sensible  nation,  the  State 
operation  of  the  railways  has  given  rise  in  Parliament 
to  very  severe  and  well-founded  criticisms.  In  this  con- 
nection I  need  simply  call  -attention  to  the  recent  Par- 
liamentary report  of  11.  Hubert,  who  has  been  several 
times  Minister.  So  strong  is  the  blame  in  this  docu- 
ment that  it  places  the  operation  of  the  Belgian  roads 
very  much  below  that  of  private  companies,  and  espe- 
cially below  that  of  the  French  Northern  Company, 
which  operates  a  system  similar  to  those  of  Belgiiun. 
M.  Hubert  even  goes  so  far  as  to  suggest  that  it  might 
be  advantageous  to  lease  the  Belgian  roads  to  one  or 
more  companies.  Political  reasons  oppose  such  a  radical 
change  as  that,  but  the  mere  fact  of  it  being  proposed 
condemns  the  State  management  of  the  Belgian  railway 
system.* 

The  weakness  of  State  administration  in  such  matters 
springs  from  the  ver}'  nature  of  our  modern  contem- 
porary governmental  forms.  As  a  general  thing.  State 
functionaries  advance  by  age,  and  even  when  promotion 
comes  through  special  choice  the  fortunate  oflBceholder 
owes  liis  success  largely  to  the  fact  that  he  has  served 
faithfully  for  many  years.  It  is  safe  to  say  that  almost 
never  does  a  State  functionary  get  to  the  top  before  he 
is  50  or  55,  often  even  60,  years  old.  In  big  private 
concerns,  on  the  contrary,  you  often  find  important  posts 
filled  by  men  between  35  and  42  or  43  years  of  age, 
which  is  a  great  advantage  to  these  companies,  for 
energy,  decision,  and  initiative  are  generally  dulled 
toward  60,  and  especially  so  beyond  that  year.  Again, 
the  State  ofiiceholder  is  governed  by  very  narrow  rules 
from  which  he  cannot  escape;  lie  has  no  initiative  and 
is  subject  to  a  jealous  control.  Then  there  is  State 
accounting,  often  very  niggling;  credits  parsimoniously 
accorded  which  cannot  be  promptly  increased,  however 
necessary  and  however  much  such  an  increase  would  be 


•  I  Ko  Into  tills  report  In  detail  In  the  fourth  edition  of  my 
book   Ij'Ktnt   Moitcrnr  rt   sex   ronctiomt,   pages   258   to    268. 
Purls:  I.ibrairic;  Filix  Alcan. 


to  the  public  good.  A  State  functionary  is  always 
hampered,  and  when  the  unexpected  happens  his  posi- 
tion is  not  to  be  envied.  There  is  much  more  red  tape 
in  State  accounts  than  in  those  of  private  companies, 
with  the  result  that  every  State  enterprise  is  weighed 
down  by  routineism.  Another  cause  of  the  inferiority  of 
State  functionaries  arises  from  their  not  being  able  to 
share  in  the  pecuniary  success  of  the  business  which  they 
direct.  Their  salary,  which  is  always  very  modest, 
remains  stationary,  whatever  the  profits  of  the  busineea 
may  be.  A  salary  of  from  25,000  to  35,000  francs  is 
considered  very  high  in  the  French  oflBcial  world.  In  a 
recent  Parliamentary  report  the  idea  was  put  forward 
that  no  oflicehokler  shouhl  be  paid  more  than  a  deputy 
or  senator — that  is,  15,000  francs  a  year.  But  in  big 
private  concerns  the  managers  come  in  for  a  large  share 
in  the  profits.  I  know  cases  where  engineers  from  35 
to  45  years  old,  and  directors  of  insurance  companies, 
receive  regularly  from  120,000  to  200,000  francs  an- 
nually. Small  salaries  tend  to  produce  inertness  in 
those  who  receive  them,  while  salaries  that  grow  with 
the  progress  of  the  business  have  the  contrari-  effect. 

But  this  does  not  close  the  list  of  circumstances  which 
oppose  the  operation  of  public  utilities  by  the  State  or 
municipalities.  In  our  modern  democratic  countries 
the  Government  and  public  men  are  beset  by  election 
considerations.  OfiBceholders  are  always  thinking  of 
the  elections,  and  are,  furthermore,  subjected  to  the 
whims  of  the  politicians,  who  can  either  turn  them  out 
of  ofiBce  or  prevent  their  advancement.  The  result  is 
that  the  State  officials,  whatever  their  grade  may  be, 
are  not  free  agents  in  matters  electoral.  The  Govern- 
ment in  France  does  not  hesitate,  on  the  eve  of  an  elec- 
tion, to  send  officials  a  circular  letter  ordering  them  to 
support  the  Government's  candidates.  The  consequence 
is  that  the  liberty  of  choice  at  tlie  ballot-box,  and,  there- 
fore, political  libertj',  is  sadly  infringed  upon  in  a  coun- 
try and  among  a  people  wliere  the  central  Government 
enjoys  extensive  powers.  The  transferring  of  officials 
to  another  post  and  their  dismissal  on  account  of  po- 
litical hostility  or  even  lukewarmness  is  a  common  oc- 
currence in  France. 

Germany  furnished  recently  a  striking  example  of 
Government  pressure,  though  of  a  somewhat  different 
character  from  those  just  mentioned.  I  refer  to  the 
Prussian  Government  stopping  all  orders  of  railway 
material  from  the  Graffenstadten  works  in  Alsace,  for 
the  openly  declared  reason  that  this  concern  had  at  ita 
head  a  director  who  was  unfriendly  to  Germany.  The 
company  was  given  clearly  to  understand  that  this  pol- 
icy would  be  continued  so  long  as  this  objectionable 
person  remained  at  his  post.  After  some  hesitation  the 
board  of  directors  removed  him.  This  pressure  from 
a  Government  operating  an  important  railway  system 
is  not  always  exercised  in  such  a  bold  fashion,  but  it 
makes  itself  felt  almost  always  either  openly  or  secretly. 


The  consequence  is  that  here  again  tlie  political  liberty 
of  the  citizen  is  infringed  upon. 

There  is  an  objection  of  still  another  sort,  and  a  very 
grave  one,  against  State  ownership  of  public  utilities. 
To  meet  the  demands  of  one  kind  and  another  which 
they     entail,     the     Government     is     obliged     to     be 
continually  borrowing.     But  repeated  loans  depreciate 
public  credit,  so  that  in  a  grave  crisis  a  Government 
finds  it  difficult  to  obtain  loans  necessary  to  the  very 
life  of  the  nation.     Many  examples  of  this  might  be 
given.    Take  Kussia,  for  example.    Before  the  outbreak 
in  1904  of  the  Kusso-Japanese  War  the  Tsar's  Govern- 
ment took  over  the  larger  part  of  the  railways  and  began 
operating  them,  which  greatly  increased  tlie  countr3-'s 
debt;  for  the  Government,  to  meet  this  expense  and 
make  the  necessary  extensions,  was  obliged  to  negotiate 
a  big  loan  almost  every  year,  the  result  being  that  at 
the  moment  of  the  commencement  of  hostilities,  the 
debt  had  attained  16  or  17  milliards  of  francs.     The 
defeats  came  and  then  the  credit  of  Kussia  collapsed. 
The  public  of  England  and  France  recalled  that  even  in 
peace  times  the  Russian  Government  was  forced  to  bor- 
row  .inmially,  but   it  was  not   remembered  'that  this 
money  was  for  the  building  of  railways.    So  the  Rus- 
fiian  5  per  cents,  fell  below  80.    There  can  be  no  doubt 
that  if  Russia  had  not  squandered  so  many  milliards 
in  buying  and  building  railways,  but  had  left  all  this 
to  private  companies,  her  debt  would  have  been  less 
and  the  moral  effect  produced  by  this  immense  total 
would  have  been  less  harmful.    It  required  four  or  five 
years  after  the  peace  for  Russian  credit  to  recover  itself, 
and  during  that  period  the  Government  could  borrow 
only  on  very  hard  terms  and  could  not  renew  the  rolling- 
stock  of  her  railways  or  go  on  with  their  extension. 
But  if  the  roads  had  been  in  the  possession  of  companies 
with  shareholders  in  France,  Belgium,  and  Holland,  for 
example,  the  money  would  have  been  easily  found.    In 
fact,  the  Russian  Government  has  been  compelled  to 
hand  hack  to  private  companies  a  large  part  of  its  roads 
in  order  not  to  be  obliged  each  year  to  go  abroad  seeking 
money  and  thus  weaken  still  further  its  foreign  credit. 
A  similar  but  less  pronounced  example  of  this  same 
thing  is  furnished  by  Germany.     It  cannot  be  denied 
that  Germany  is  a  prosperous  country,  and  its  situation 
both  at  home  and  abroad  appears  to  be  very  solid.    Yet 
the  German  public  funds  are  relatively  low,  considerably 
below  the  French.     The  difference  is  relatively  enor- 
mous, and  there  is  a  tendency  for  it  to  go  on  falling. 
In  1808  the  German  -3  per  cents,  were  only  5  or  6  points 
below  the  French  3  per  cents.,  the  average  figure  of  the 
first  being  95  and  the  second  lOOVo.     But  in  June  of 
the  past  year  there  was  a  difiference  of  14  points,  the 
German  3  per  cents,  being  quoted  at  79  and  the  French 
3  f)er  cents,  at  93yn.     Several  reasons  have  been  ad- 
vanced to  explain  this  difference,  but  it  seems  to  me 
that  the  principal  one  has  been  overlooked.    For  twenty 


years  France  has  asked  no  public  loan,  the  French  Gov- 
ernment, until  the  taking  over  of  the  Western  Railway 
in  1908,  abstaining  from  any  large  scheme  requiring  a 
great  amoimt  of  capital,  whereaa  the  German  Govern- 
ment, and  especially  tlie  Prussian  Government,  owning 
and  operating  the  State  railways,  have  been  obliged  and 
are  still  obliged  to  borrow  every  year  in  order  to  better 
the  existing  lines  and  to  construct  new  ones.  The 
result  is  that  the  French  public  funds  have  never  been 
brought  into  competition  with  new  loans,  while  the 
existing  German  public  funds  have  to  meet,  and  are  still 
meeting  every  year,  the  competition  and  pressure  occa- 
sioned by  these  new  issues  of  Government  bonds.  In 
fact,  this  singular  situation  has  come  to  pass :  German 
public  funds  are  now  lower  tlian  those  of  Italy,  Swit- 
zerland, and  even  Norway.  At  the  end  of  last  June 
German  S^A  per  cents,  were  selling  at  90,  while  Italian 
31/0,  notwithstanding  the  war  with  Turkey,  the  uncer- 
tainty as  to  how  it  will  end,  and  the  expenses  occasioned 
thereby,  were  worth  97.80;  Swiss  31/0,  91  and  92;  and 
Norwegian  314,  91  and  93.  This  depression  in  the 
public  funds  of  Germany  might  also  be  partly  attributed 
to  the  expenses  of  the  navy,  but  the  fact  remains  that 
if  Prussia  and  the  German  States  were  not  burdened 
with  the  construction  and  the  operation  of  the  railways 
of  the  country,  the  German  Empire  would  not  be  asking 
at  every  moment  for  money  and  its  credit  would  not 
stand  so  low  as  it  does. 

It  is  a  source  of  unquestionable  strength  for  a  nation 
to  have  good  credit,  especially  at  the  moment  of  some 
great  crisis  which  may  come  at  any  hour.  At  such  a 
time  those  who  have  money  to  lend,  knowing  that  the 
French  3  per  cents,  have  stood  for  more  than  a  quarter 
of  a  century  in  the  neighborhood  of  par  and  even  above, 
would  be  more  disposed  to  subscribe  to  a  public  loan 
required  by  the  circumstances  of  the  moment  and  at  a 
rate  that  would  not  be  a  burden  to  the  country.  Our 
fine  position  in  this  respect  has,  however,  been  some- 
what marred  since  we  took  over  and  began  operating 
the  Western  Railway.  In  order  to  extend  its  system, 
the  Government  this  present  year  has  had  to  borrow 
300,000,000  francs,  and  this  will  have  to  be  repeated  in 
the  immediate  years  to  come;  so  this  loan,  with  the 
8  to  9  million  to  follow,  will  unquestionably  have  a 
weakening  effect  on  French  credit.  Though  these  new 
bonds  are  of  a  different  sort  from  our  3  per  cents.,  the 
latter  have  already  declined  2  per  cent,  and  are  now 
vacillating. 

I  need  not  dwell  longer  on  this  question  of  State 
ownership.  From  the  point  of  view  of  pure  political 
economy  there  can  be  no  question  that  it  is  an  evil.  Nor 
is  the  conclusion  less  positive  when  the  matter  is  con- 
sidered from  a  sociological,  a  political,  or  a  financia." 
point  of  view. 

Padl  Leroy-Beaulibc 


R.— 147 


\ 


^ 


/ 


l^-icpn 


cnc   (If- 


EXTRACTS 


FROM    THE 


REPORT  OF  THE  ROYAL  COMMISSION 


APPOINTED    TO    INVESTIGATE    THE 


POSTAL,  TELEGRAPH  AND  TELEPHONE  SERVICES 


OF    THE 


COMMONWEALTH  OF  AUSTRALIA 


V  ^ 


ri    ■«<•    /'^     "^ 


v*^- 


AUG  3      1915 


l^ 


h' 


{Reprinted  from  the  Original.) 


EXTRACTS    FROM    REPORT* 


1.  We,  your  Commissioners,  appuinted  by  Letters  Patent  dated  the  22nd 
of  June,  1908,  to  inquire  into  and  report  upon  the  Postal,  Telegraphic,  and 
Telephonic  Services  of  the  Commonwealth,  and  more  particularly  in  relation 
to  the  following  matters : — 

(1)  Management ; 

(2)  Finance ; 

(3)  Organization,   including   discipline; 

(i)     Extensions  in  country  districts,  and  particularly  in  remote  or 
sparsely-populated  parts  of  the  Commonwealth; 

(5)     Complaints  in  relation  to  the  services; 

have  the  honour  to  report  that  we  entered  upon  our  inquiry  in  July,  1908,  but 
were  prevented  from  holding  continuous  investigations  through  the  interven- 
tion of  Parliamentary  business. 

2.  The  inquiry  occupied  228  sittings,  and  your  Commissioners  visited 
every  State  and  took  evidence  at  all  the  State  capitals,  and  at  Fremantle  and 
Kalgoorlie,  Western  Australia,  and  at  Launceston,  Tasmania.  Personal  visits 
of  inspection  were  made  to  all  the  General  Post  Office  buildings,  and  many 
branch  telephone  exchanges,  and  suburban  post-offices  of  Sydney  and  Mel- 
bourne. 

*  *         * 

DEFECTS  IN  MANAGEMENT. 
Defects    in    manage-  9.     Your  Commissioners,  during  their  inquiry  into  the  management  of  the 

men    an    sys  em.  p^^^  ^^^j  'f  giggj-^p}^  Department,  discovered  defects  which  were  due  to  lack  of 

efficient  management  as  distinct  from  the  system  of  control,  and  also  defects 
which  were  inherent  in  the  system.  In  framing  this  Report  endeavours  have 
been  made  to  broadly  separate  the  defects  of  system  from  those  of  manage- 
ment. It  is  evident  that  an  inferior  system,  even  under  sound  management, 
would  make  for  an  indifferent  service.  When,  however,  an  inferior  system 
is  associated  with  a  weak  and  limited  management,  the  results  are  disastrous. 

*  *         * 

Central       Executive  32.     Your  Commissioners  consider  that  the  Central  Executive  in  neglect- 

'^esti°o"n"'''*  '""^  ''""  '"^  ^°  exercise  ordinary  foresight  by  making  the  necessary  provision  to  meet 
the  demands  of  the  public  when  the  telephone  rates  were  reduced  in  1907,  and 
in  failing  to  profit  by  the  experience  of  other  countries  in  similar  circum- 
stances, is  responsible  for  the  congested  state  of  the  telephone  service,  and 
the  consequent  overworking  of  the  officers  of  the  Department.  The  evidence 
discloses  that  the  reductions  in  the  telephone  rates  were  made  on  the  advice 
of  a  subordinate  officer,  and  in  opposition  to  the  advice  of  the  Permanent  Head 
Reductions    opposed     ^^'^  Chief  Electrical  Engineer,  and  your  Commissioners  consider  that  the 

^^ ^^^L'^'.'^t"}  ".**'^     then  Postmaster-General  took  action  without  having  anv  sound  reason  for 
and   Chief    Electrical         ,,.,.,  r^         . 

Engineer.  the  drastic  reduction  made. 

«         *         * 

♦The  extracts  are  an  exact  reprint  from  the  official  Report,  which  was  ordered  to  be  printed,  October 
.5,  1910.  The  Postal,  Telegraph  and  Telephone  services  in  .Australia  arc  all  undtr  the  administration  of  the 
I'o'itmaster-General  of  the  Commonwealth. — Ed. 


Continuity  of  policy. 


Baneful   influence  of 
Ministerial  Head. 


Interfering    with    de- 
tails. 


Post  and  Telegraph 
Department  not  to 
be  use'l  for  political 
purposes. 


Condition     of 
Ices     when 
ferred. 


serv- 
trans- 


Position 
worse. 


Alleged 
funds. 


getting 


want      0* 


DEFECTS  INHERENT  IN  THE  SYSTEM  OF  CONTROL. 
Ministerial  Control. 

40.  In  the  administration  of  the  Commonwealth  Post  and  Telegraph  De- 
partment it  is  desirable,  in  the  interests  of  the  public,  that  continuity  of  policy 
should  be  maintained.  The  Central  Executive  attempted  to  formulate  a 
definite  policy;  but  it  was  alleged  that  a  continuous  policy  could  not  be 
exercised  by  the  Department  because  of  its  incompatibility  with  frequent 
changes  of  the  Ministerial  Head.  There  have  been  nine  Postmasters-General 
since  the  inauguration  of  the  Commonwealth,  and  the  evidence  discloses  that 
most  of  the  Ministerial  Heads  endeavoured  to  efTect  alterations  of  policy. 
Ministers  are  apparently  anxious  to  signalize  their  occupancy  of  office  by 
some  new  and  distinct  act  of  administration;  but  due  regard  does  not  appear 
to  have  been  paid  to  the  effect  of  such  actions.  The  baneful  influence  of 
ill-considered  interference  in  administration  by  the  Ministerial  Head  is 
strikingly  illustrated  by  the  alteration  of  the  telephone  rates  in  February, 
1907,  by  the  Minister  of  the  time,  in  opposition  to  the  advice  of  his  admini- 
strative and  technical  officers.  The  disregard  of  the  effects  of  such  drastic 
innovations  is  detrimental  to  the  carrying  out  of  a  continuous  and  definite 
policy,  even  if  formulated  by  the  Central  Executive.  There  also  seems  to 
have  been  a  strong  inclination  on  the  part  of  the  Postmasters-General  to 
give  too  much  consideration  to,  and  interfere  with,  details,  instead  of  con- 
fining themselves  to  the  broader  principles  of  administration.  Your  Com- 
missioners consider  that  it  is  impossible  for  a  Minister  to  obtain  a  reasonable 
grasp  of  the  affairs  of  a  Department  of  such  magnitude  as  the  Post  and  Tele- 
graph Department,  even  with  a  longer  tenure  of  office  than  has  hitherto  been 
the  case.  Delays  in  the  execution  of  administrative  duties  are  also  occasioned 
by  the  enforced  absence  of  the  Minister  from  his  Department  on  political 
business.  The  Post  and  Telegraph  Department  is  an  institution  daily  affect- 
ing almost  every  individual  in  the  community  to  a  greater  extent  than  any 
other  Government  Department  in  the  Commonwealth,  as  it  provides  public 
utilities  of  paramount  importance.  It  supplies  services  to  the  public,  the 
control  of  which  should  be  independent  of  political  exigencies. 

*        *        * 
INEFFICIENCY  OF  THE  SERVICES. 

44.  The  evidence  clearly  discloses  that  the  Department  did  not  keep 
equipment  up  to  the  requirements,  this  being  common  to  all  the  States,  with 
the  exception  of  South  Australia,  where  the  telegraph  and  telephone  lines 
were  said  to  be  in  good  order.  With  the  above-mentioned  exception,  the 
condition  of  the  services  when  handed  over  to  the  Commonwealth  was  far 
from  satisfactory.  This  defect  should  have  been  rectified  in  the  early  days 
of  Commonwealth  control.  Since  the  time  referred  to.  the  Central  Executive 
has  been  continuously  forced  to  neglect  new  works,  and  prevented  from 
placing  maintenance  on  an  effective  basis,  mainly  in  connexion  with  tele- 
graph and  telephone  lines  and  switchboards.  This  phase  of  the  investigation 
will  be  more  fully  dealt  with  under  the  heading  of  "Finance." 

45.  The  starved  condition  of  the  services  is  largely  answerable  for  the 
imperfect  working  of  the  telephonic  and  telegraphic  installations.  Evidence 
was  received  that  the  position  was  getting  worse,  owing  to  the  increased 
volume  of  business  making  the  adverse  conditions  more  accentuated,  but 
recent  action  is  remedying  that  condition  to  some  extent. 

46.  The  reason  assigned  by  all  the  officials  for  the  failure  to  place  the 
services  in  proper  working  order  was  want  of  sufficient  funds.  There  is  evi- 
dence that  the  Department  in  1901  endeavoured,  through  the  Treasury  of  the 


time,  to  obtain  the  necessary  funds  to  place  the  services  in  an  efficient  condi- 
tion by  resorting  to  a  loan,  but  Parliament  reiu>cd  to  sanction  this  proposal. 
The  curtailment  of  funds  at  that  period  was  apparently  the  result  of  the  desire 
to  keep  the  cost  of  Federation  within  a  limit  of  £300,000  per  annum.  The 
adoption  of  that  course,  in  spite  of  the  demands  of  the  Post  and  Telegraph  De- 
partment, is,  in  the  opinion  of  your  Commissioners,  evidence  that  the  system 
of  management  is  faulty,  in  that  it  permitted  the  Trea'-urer  to  assume  financial 
control  of  services  for  whose  efficiency  he  was  not  responsible.  This  aspect  of 
the  position  is  emphasized  by  the  fact  that  the  Treasurer  was  at  that  time 
aware  of  the  necessities  of  the  Post  and  Telegraph  Department,  notwith- 
standing which  he  returned  to  the  State  Governments  the  whole  of  the  surplus 
revenue  beyond  their  constitutional  proportion.  In  this  connexion  it  would 
appear  that  the  Postmaster-General  was  too  complaisant  in  respect  to  the 
actions  of  the  Treasurer.  The  Central  Executive,  though  representing  to 
the  Postmaster-General  the  omission  to  supply  sufficient  funds,  should  have 
more  persistently  urged  upon  him  the  results  that  would  occur  from  a  con- 
tinuation of  the  starvation  policy.  This  matter  will  be  further  dealt  with 
in  the  financial  section  of  this  Report. 


Effect      of      eurtall- 
ment   of   funds. 


Postmaster     General 
too  complaisant. 


FINANCE. 
FINANCIAL  POSITION  OF  THE  DEPARTMENT. 

66.  Your  Commissioners  experienced  considerable  difficulty  in  procuring 
satisfactory  and  definite  information  in  regard  to  the  financial  position  of  the 
Commonwealth  Post  and  Telegraph  Department.  This  was  evident,  not  only 
in  connexion  with  the  Central  Executive,  but  was  further  emphasized  when 
close  examination  was  made  of  the  principal  officials  in  the  States.  These 
officials  stated  that  they  were  unable  to  provide  the  requisite  information 
because  the  State  Post  and  Telegraph  Departments  did  not  issue  balance- 
sheets.  No  attempt  in  this  direction  has  been  made  under  Commonwealth 
control  until  quite  recently.  This  inability  to  supply  definite  financial  in- 
formation is  a  severe  reflection  oii  the  Department  for  not  providing  that 
primary  essential  of  effective  control — a  proper  system  of  accounts. 

67.  In  their  endeavours  to  obtain  the  necessary  particulars  your  Com- 
missioners requested  the  Department  to  furnish  certain  returns  to  enable  them 
to  draft  an  approximate  balance-sheet.  The  Department  has  complied  with 
the  various  requests  made  in  this  direction,  and,  in  addition,  furnished  a  return 
(Parliamentary  Paper,  No.  41,  1909),  prepared  by  order  of  Parliament,  con- 
taining certain  detailed  information.  This  return  was  confined  to  the  year 
1907.  but,  beyond  conveying  a  general  impression  that  the  Postal  Branch  of 
the  Department  was  a  profitable  section,  and  that  losses  were  incurred  in 
the  telegraph  and  telephone  services,  it  is  not  of  much  value  in  disclosing, 
even  approximately,  the  financial  position  of  the  Department. 


No  reliable  data  ob- 
tainable. 


Return    furnished. 


Return   not  of  much 
value. 


70.  The  Department  furnishes  annual  statements  showing  only  revenue 
receipts  from  its  chief  branches,  and  the  total  expenditure,  including  new 
works,  for  all  branches  of  the  service.  Such  statements  are  absolutely  use- 
less for  the  purpose  of  supplying  the  requisite  information  to  determine  the 
financial  position  of  its  several  branches. 

*  m  * 

82.  Your  Commissioners  therefore  conclude  that  the  Department's  un- 
sound financial  position  is  due  to  the  fact  that  telegraphic  and  telephonic 
services  are  rendered  at  rates  which  do  not  return  revenue  sufficient  to  cover 
all  charges  against  capital  account,  and  working  expenses. 


Annual 
useless. 


statements 


Telegraph   and  Tele- 
phone rates  too  low. 


construction 
methods. 


PURCHASE  OF  MATERIALS. 

103.     Insufficiency  of  funds  prevents  the  Department  in  all  the  States 

from  holding  reserves  of  materials.    The  Chief  Electrical  Engineer,  the  States' 

Electrical  Engineers,  and  other  responsible  officers,  complained  of  the  want 

^^sregar^  u  s  ,  n°e'^s  s     °^  reserve  Stocks.    So  far  as  construction  materials  are  concerned,  the  Depart- 

methods.  ment  has  been  working  in  a  most  primitive   manner,  exhibiting  an  utter 

disregard  of  ordinary  business  methods,  and  entailing  a  cumbersome  and 

expensive  system  of  purchase.    Your  Commissioners  recommend  that  six  to 

nine  months  reserve  stock  should  be  held. 

*  *         ♦ 

CONDITION  OF  TELEPHONE  SERVICES. 

115.  The  result  of  unduly  curtailing  expenditure  was  pointed  out  re- 
peatedly by  the  Department,  and  the  required  provision  was  made  on  the  Esti- 
No  improvement  in  mates,  but  was  reduced  by  the  Treasurer.  The  longer  reconstruction  is  de- 
ferred and  the  longer  installation  of  a  new  system  is  postponed  the  more 
expensive  the  work  becomes,  on  account  of  extensions  made  to  the  old  system. 
Construction  methods  were  found  to  be  practically  the  same  as  in  1901,  as 
the  Department  claimed  it  had  been  impossible  to  improve  those  methods 
since  that  date,  although  the  adoption  of  improved  methods  would  obviously 
have  tendered  towards  economy.  It  may  be  mentioned  that  between  1886 
and  1904  the  New  York  Telephone  Company's  plant  was  reconstructed 
three  times  to  bring  the  equipment  up  to  the  highest  standard,  and  to  render 
the  service  more  efficient.  From  1900  to  1907  the  Bell  Telephone  Company, 
United  States  of  America,  spent  about  £70,000,000  on  telephone  under- 
takings. 

*  *        * 

NEW  SOUTH  WALES. 

119.  The  telephone  aerial  wires  and  cables  in  the  city  and  suburbs  of 
Sydney  are  seriously  congested,  and  further  undergrounding  is  necessary. 
Sufficient  funds  and  trained  staff  are  not  available  for  this  purpose.  The 
magneto  switchboard  at  the  Central  Exchange,  Sydney,  for  flat  rate  sub- 
scribers is  out  of  date.  Your  Commissioners  also  found  that  the  g^eat  de- 
mands made  upon  it  impaired  its  efficiency.  On  the  new  common  battery 
board  there  is  sufficient  accommodation  for  all  measured  service  subscribers, 
but  not  for  all  subscribers.  There  are  not  enough  transfer  lines  between 
the  common  battery  board  and  the  magneto  boards  in  the  Central  Exchange. 
More  junction  lines  are  required  with  branch  exchanges. 

VICTORIA. 

120.  The  Victorian  telephone  service  was  found  to  be  in  the  most  un- 
satisfactory condition  of  any  in  the  Commonwealth.  In  Melbourne  the  switch- 
board and  instruments  were  obsolete.  The  Chief  Electrical  Engineer  stated 
that  he  knew  of  only  one  other  system  in  the  whole  world  which  was  in  a 
similarly  antiquated  condition.     The   switchboard   was   condemned   twenty 

Antiquated  switch-  years  previously,  at  the  time  when  the  State  Government  took  over  the 
service  from  the  private  company  which  conducted  it.  The  technical  experts 
reported  at  that  time  that  metallic  circuits  and  undergrounding  were  neces- 
sary; but  the  State  Government  did  not  provide  the  funds  requisite  for  the 
purpose.    The  deplorable  condition  of  the  Melbourne  telephone  service  when 

bie.  transferred  to  the  Commonwealth  is  evident  from  the  fact  that  at  that  period  the 

Electrical  Engineers'  Committee  estimated  that  it  would  cost  £226.000  to 
place  the  service  in  an  efficient  condition.  Although  since  Federation  at,- 
tempts  have  been  made  to  improve  the  service  by  the  provision  of  additional 
junction  lines,  extra  attendants,  and  new  instruments  at  subscribers'  premises, 


Impaired  efficiency. 


Condition        dcplora- 


f 


the  funds  provided  are  stated  to  have  been  inadequate  even  to  extend  the 
old  system,  much  less  to  replace  it  with  a  proper  system.  The  evidence 
disclosed  that  the  Melbourne  Telephone  Exchange  and  lines  were  in  much 
the  same  condition  as  in  1901,  the  only  difference  being  that  the  network 
was  larger,  and,  therefore,  more  expensive  to  reconstruct.  Recently  steps 
have  been  taken  to  put  the  service  in  an  efficient  condition,  and  a  common 
battery  switchboard  is  now  in  course  of  erection,  and  undergrounding  of  lines 
and  provision  for  metallic  circuits  are  being  proceeded  with. 

*  *         « 

TELEPHONE  TRUNK  LINES. 
125.     In  all  the  States  necessary  extensions  of  trunk  lines  were  stated  to 
be  delayed  through  insufficiency  of  funds. 

*  *         * 

ORGANIZATION,  INCLUDING  DISCIPLINE. 
215.  Your  Commissioners  desire  to  state  that  the  bulk  of  the  evidence 
presented  during  the  course  of  the  investigation  related  to  Organization. 
Under  this  section  are  included  all  the  ramifications  of  the  Service,  extending 
from  the  office  of  the  Central  Executive  to  every  State  Branch  and  sub- 
branch.  In  addition  to  examining  witnesses,  your  Commissioners  made  per- 
sonal inspection  of  the  accommodation  and  the  working  conditions  in  the 
General  Post  Office  and  other  Post  Offices  in  each  State.  The  responsible 
officers  of  the  Department  stated  that  the  branches  were  insufficiently  staffed, 
and  alleged  that  under  existing  conditions  it  was  impossible  for  the  Depart- 
ment to  render  a  thoroughly  efficient  service  to  the  public.     The  evidence 

disclosed  the  existence  of  an  abnormal  amount  of  discontent  within  the  Discontent  in  serv- 
ice* 
Department.  Your  Commissioners  consider  that  a  sound  system  of  organi- 
zation is  impracticable  without  an  effective  system  of  management,  together 
with  highly  competent  support  in  the  States'  branches.  It  is  also  requisite 
to  provide  proper  working  conditions,  and  ample  and  well  arranged  office 
accommodation,  in  order  to  secure  the  necessary  facilities  for  the  efficient 
transaction  of  public  business,  and   to  enable  thorough  supervision   to   be 

exercised. 

«         *         « 

PUBLIC  COMPLAINTS  IN  RELATION  TO  THE  SERVICES. 

1058.  Notifications  were  issued  to  members  of  both  Houses  of  the  Com- 
monwealth Parliament,  and  to  Municipal  Councils,  Chambers  of  Commerce, 
Chambers  of  Manufactures,  and  Stock  Exchanges  throughout  the  Common- 
wealth, to  the  effect  that  any  associations  or  public  bodies  desirous  of  ten- 
dering evidence  would  be  afforded  an  opportunity  of  doing  so.  In  addition  Evidence  invited, 
to  associations  or  public  bodies  which  availed  themselves  of  this  opportunity, 
representatives  of  commercial  firms  in  several  States  volunteered  evidence. 

1059.  The  following  is  a  recital  of  the  principal  complaints  received : — 

NEW  SOUTH  WALES. 
Evidence  was  tendered  in  this  State  by  representatives  of  Sydney  com- 
mercial firms,  the  Farmers  and  Settlers'  Association,  the  Country  Store- 
keepers' Association,  the  Country  Press  Association,  the  Typographical  Asso- 
ciation, and  statement?  were  received  from  a  number  of  Municipal  Councils. 
to  the  following  effect : — 


General  evidence  re- 
ceived. 


General. 
(1)     There  is  an  absence  of  a  business-like  system,  occasioning 
circumlocutory  methods  in  the  Department. 


Complaints  stated. 


(2)     Excessive  centralization  exists  and  causes  delays  in  public 

business. 
******  *  *  * 

(5)  Insufficiency  of  staff  causes  delays  in  replying  to  public 

inquiries  and  complaints. 

(6)  There  is  a  want  of  discipline  among  junior  members  of  the 

staff. 

*  *        * 

Telephones. 
C38)     The  Sydney  service  is  unsatisfactory,  and  delays  occur  in 
the  exchange. 

*  *         * 

VICTORIA. 

1060.  Evidence  was  received  in  this  State  from  the  Chamber  of  Com- 
merce. Melbourne,  the  representative  of  the  Amalgamated  Society  of 
Engineers,  and  certain  shipwrights  formerly  employed  by  the  Department, 
to  the  following  effect : — 

(1)  There  is  an  absence  of  business  methods  in  the  Depart- 

ment. 

(2)  Errors  occur  in  the  sorting  and  delivery  of  letters  which 

display  carelessness  and  lack  of  discipline. 
******  *  *  * 

(4)  The  Melbourne  telephone  service  is  most  unsatisfactory. 

(5)  The   Department   employs  untrained   fitters   at   less   than 

standard  rates. 

(6)  Pole  dressing  is  executed  by  non-tradesmen. 

*  *        * 
SOUTH  AUSTRALIA. 

1062.  Evidence  was  tendered  in  this  State  by  the  representatives  of  the 
Adelaide  Chamber  of  Manufactures,  and  an  Adelaide  commercial  agent, 
and  statements  were  received  from  the  Importers'  and  Agents'  Association 
of  Port  Adelaide,  and  several  country  municipal  councils  (vide  Appendix 
XXXI.  to  the  Minutes  of  Evidence). 

The  main  complaints  received  were  as  follows : 

(1)     More  business-like  management  and  decentralization   are 

necessary. 
******  *  *  « 

(7)  Telephone  service,  Port  Adelaide,  is  most  unsatisfactory. 

(8)  Telephone  service  between  Adelaide  and  Port  Adelaide  is 

very  bad. 

******  ♦  *  * 

WESTERN  AUSTRALIA. 

1063.  Evidence  was  submitted  in  this  State  by  the  representatives  of 
the  Chambers  of  Commerce  at  Perth  and  Fremantle,  the  Superintendent  of 
Fire  Brigades  at  Perth,  and  by  several  Municipal  Councils,  to  the  following 

effect : — 

******  *  *  * 

(9)  The  telephone  service  at  Fremantle  is  most  unsatisfactory. 

******  *  *  * 

C18)     Telephones  are  not  efficiently  inspected. 

******  *  *  • 


TASMANIA. 

1064.  Evidence  was  received  from  the  representatives  of  the  Chambers 
of  Commerce  at  Hobart  and  Launceston,  and  a  Hobart  commercial  agent. 
Statements  were  submitted  by  several  country  Municipal  Councils.  The 
complaints  made  were  as  under: — 

*«•**«  «  *  • 

(15)     The  telephone  service  at  Launceston  is  very  unsatisfactory. 
(16>     Tasmanian  trunk  line  services  are  bad. 

(17)  Telephone  service  at  Devonport  is  unsatisfactory,  and  not 

private. 

(18)  Telephone  facilities  in  country  districts  are  insufficient. 

1071.  Your  Commissioners  consider  that  the  number  and  magnitude  of 
the  complaints  received  indicate  the  existence  of  strong  dissatisfaction  among 
the  public  with  the  Postal.  Telephone,  and  Telegraph  services.  Your  Com- 
missioners are  of  the  opinion  that  the  bulk  of  the  complaints  made  were  Compiainu  justifia- 
entirely  justifiable,  and  are  convinced  that  to  obtain  an  efficient  service  it  is 
essential  that  improved  methods  of  Management,  Finance,  and  Organization 
be  promptly  adopted. 

We  have  the  honour  to  be. 

Your  Excellency's  most  obedient  Servants. 

WILLIAM  H.  WILKS,  Chairman. 
HUGH  de  LARGIE. 
D.  STORRER. 
WILLIAM  WEBSTER. 
Parliament  House, 
Melbourne.  30th  September.  1910. 


hn.i. 


1^ 

3  '^- '  ' 


y\f' 


Telephone  Memoranda 


A  Few  Facts  and  Opinionj^ 
Foreign  and  Domestic    ^^' 


In  response  to  an  inquiry,  Theodore  N.  Vail,  President  of  the  American 
Telephone  &  Telegraph  Company,  made  this  statement  December  19,  1913: 

Our  telephone  system  has  been  the  study  of  investigators  from  many 
countries.  It  has  been  considered  the  world's  model,  not  because  it  is 
the  largest,  but  because  it  gives  the  best  service  and  is  more  useful  to 
the  public  than  any  other  system. 

Such  success  as  we  have  achieved  has  come  from  our  study  of  facts 
and  our  willingness  to  be  guided  by  them.  We  have  not  endeavored  to 
sell  our  telephone  system  to  the  govenmient  for  the  reason  that  the  facts 
as  we  have  gleaned  them  during  the  last  thirty  years  from  all  parts  of  the 
world,  have  not  justified  such  a  course. 

Our  people  are  personally  familiar  with  every  telephone  system  that 
today  exists.  The  telephone  experience  of  Japan  or  France,  is  as  closely 
studied  as  the  experience  of  one  of  our  American  cities. 

We  have  freely  given  our  aid  to  make  the  government  systems  in 
foreign  lands  as  good  as  possible,  believing  that  every  advance  in  the  art 
helped  us  to  advance.  We  have  never  foimd  any  foreign  subscribers  as 
well  served  as  our  subscribers,  nor  any  foreign  public  receiving  greater 
advantages  from  the  telephone  than  the  American  public. 

We  recognize  our  responsibility  to  the  telephone-using  public,  which 
is  practically  the  whole  public,  and  for  that  reason  favor  an  intelligent, 
painstaking,  thorough,  scientific  study  of  the  proposals  for  public  owner- 
ship. We  cannot  be  content  if  facts  which  we  know  to  exist  are  carelessly 
ignored.  But  if  all  the  facts  are  discovered,  imderstood  and  exploited,  we 
are  bound  to  be  content  with  a  decision  based  on  those  facts. 


uurt:,^ 


J   W    . 


f 


ir\tr-t  ir  ■  v^  V •  M MMiri>i4»t> 


AMERICAN  TELEPHONE  AND  TELEGRAPH  COMPANY 

In 

Information    Department 
NEW  YORK 


—   /C^mf3.^ 


OUTLINE 
Public  Sentiment 

Pages 

Foreign  9 

American 9-1 1 

Public  sentiment  in  Great  Britain,  the  product  of  costly  experience,  is  now  practically 
unanimous  in  condemning  its  Government  telephone  service ;  enlightened  public  senti- 
ment in  the  United  States,  as  reflected  in  the  press,  shows  that  Americans  intend  to 
profit  by  the  experience  of  other  countries,  and  that  the  proposal  to  substitute  political 
management  of  our  telephones  and  telegraphs,  for  the  highly  efficient  management  of 
private  enterprise,  will  not  be  tolerated  by  our  democratic  spirit  of  initiative  and  self- 
reliance. 

Economic  Aspect 11-15 

The  science  of  political  economy  is  well  epitomized,  as  to  government  ownership,  in 
the   words   of    Thomas   Jefferson:     "Having  always  observed  that  public  works  are 
much   less   advantageously   managed   than   the   same  are  by   private   hands,   I   have 
thought  it  better  for  the  public  to  go  to  market  for  whatever  it  wants  which  is  to  be 
found  there."    Economists,  from  Adam  Smith  down,  emphasize  Government's  "incom- 
petency as  a  business  agent,"  and  warn  us  that  it  is  fatal  "to  multiply  the  activities  of         i 
government  so  as  to  bring  about  vexatious  interference  with  liberty  or  to  restrict  legiti-         ' 
mate  enterprise."    Although  one  economist.  Prof.  H.  C.  Adams,  objected,  in  1887,  that 
monopolies,  under  "private  financiering,"  tend  to  maintain  prices  at  the  highest  profit- 
able point,  his  objection  has  since  been  overcome  by  the  institution  of  public  regula- 
tion (see  "Regulation  vs.  Ownership").     According  to  Prof.  Adams,  only  industries  of 
"Increasing  Returns"  tend  naturally  to  monopoly,  and  Adams  doubted  that  the  tele- 
phone is  such  an  industry,  as  did  other  economists. 

Foreign  Experience  No  Precedent 15-23 

It  is  unsound  to  argue  that  Americans  should  adopt  Government  Ownership  merely 
because  many  Europeans  have  adopted  it.  Conditions  differ.  An  easy-going,  Govern- 
ment-ridden European  will  tolerate  much  that  the  impatient,  exacting  "we-want-what- 
we-want-when-we-want-it"  American  would  not  tolerate  a  minute.  The  American's 
ideal  of  service  is  different:  quality  first,  with  as  reasonable  a  price  as  possible,  rather 
than  cheapness  first,  with  what  service  cheapness  will  buy.  Political  systems  differ ;  long 
tenure  of  office  in  Europe  permits  greater  efficiency  and  continuity  of  management ; 
public  officials  in  America  are  turned  out  of  office  just  as  they  begin  to  "learn  the 
ropes."  Despite  such  advantages  as  European  governments  may  possess,  their  expe- 
rience with  Government  Ownership  of  telephones  and  telegraphs  has  not  been  such  as 
to  recommend  it  to  this  country. 

Arbitrary  and  Irresponsible  Administration 

Foreign  (Official) 23-24 

(Editorial) 25-26 

American  (Official)  27 

(Editorial) 27-28 

"From  Government  there  can  be  no  appeal."     Private  companies  are  subject  to  com- 
^  plaints,  but  governments  are  subject  only  to  petitions.     Under  Government  Owner- 

3 


Pages 
ship  the  public  finds  itself  practically  powerless  to  obtain  relief  from  abuses.  (See 
"Regulation  vs.  Ownership.")  Government  employees,  protected  by  a  rigid  civil 
service,  possess  little  eagerness  to  please  the  public.  The  heads  of  private  companies 
must  account  strictly  to  the  stockholders  and  the  public  for  the  funds  invested  in  the 
enterprise,  but  governments  are  notoriously  irresponsible  in  accounting  for  public 
funds,  so  that  taxpayers — unlike  stockholders  of  a  corporation — have  no  exact  means 
of  finding  out  what  is  done  with  their  money.  Private  concerns  are  strictly  liable  for 
damages  to  persons  and  property ;  public  bodies  limit  liability,  or  evade  it  altogether. 

Comparative  Efficiency 

Official 29-30 

Editorial 30-34 

Government  management  is  never  so  efficient  as  private.  It  is  handicapped  by  inertia, 
red  tape,  and  uncertain  tenure  of  office  among  the  executives.  Private  employees  work 
less  by  the  clock  than  holders  of  government  jobs.  Their  initiative  is  not  circum- 
scribed by  definite  limitations.  Their  inefficiency  is  not  coddled  by  political  influences. 
Results,  in  the  field  of  telephones  and  telegraphs,  amply  bear  out  the  superior  efficiency 
of  private  management,  both  as  to  economic  operation,  and  the  extent  and  quality  of 
service. 

Service 

Foreign  (Official) 35-38 

(Editorial) 38^2 

In  point  of  service,  there  is  no  comparison  between  the  government  managed  telephone 
of  foreign  countries,  and  the  privately  operated  telephone  in  the  United  States.  Only 
Americans  who  have  traveled  abroad  fully  appreciate  why  foreigners  envy  us  our 
privately  operated  telephone  service.  The  delays,  mismanagement  and  general  inade- 
quacy of  Government  telephones  in  Europe  are  illustrated  by  numerous  instances. 
Government  telegraphs  are  equally  uninviting.  The  only  telegraph  service  abroad  com- 
parable with  our  own  is  that  known  as  "preferred"  or  "urgent",  for  which  double  and 
triple  rates  are  charged.  The  bulk  of  European  telegrams  are  "ordinary",  and  (<r.  g.  on 
the   Continent)    must   wait   their  turn — often  for  hours — before  despatched. 

Rates 

Foreign  (Official) 42-45 

(Editorial) 45^8 

American  (Editorial) 48 

The  familiar  cry  of  "cheap  rates"  under  Government  Ownership  is  misleading.  Gov- 
ernment Ownership  is  no  panacea  for  rates :  foreign  Government  telephone  systems  are 
constantly  harassed  by  rate  dissatisfaction,  which  is  aggravated  by  political  pressure. 
The  doctrine  "Political  might  makes  right",  renders  impossible  a  fair  and  equitable 
adjustment  of  rates  under  Government  Ownership.  Governments  do  not  operate  as 
cheaply  as  private  companies,  and  can  not  give  cheaper  rates  without  cheapening  the 
product  (service),  or  producing  a  deficit.  Deficits  must  be  met  by  taxation,  which 
means  a  borrowing  from  Peter  (the  taxpaying  non-user,  who  is  apt  to  be  poor,  being  a 
non-user),  for  the  benefit  of  Paul  (the  subsidized  user,  who  is  generally  in  better  cir- 
cumstances than  the  non-user).  While,  in  some  cases,  foreign  telephone  rates  are 
cheaper  than  in  the  United  States,  it  can  be  conclusively  demonstrated  that  the  average 
charge  for  telephone  service  abroad  is  greater  than  in  this  country,  when  the  same 
units  of  measurement  are  used,  notwithstanding  that  in  the  United  States,  service — in 
quality  and  extent — is  immeasurably  superior,  purchasing  power  of  money  less,  and 
employees'  pay  about  twice  as  high.  Telegraph  rates,  where  length  of  haul  and  speed 
of  service  are  comparable,  are  less  in  the  United  States  than  abroad  (See  "Service"). 

4 


Expense 

Pages 

Foreign  (^Official) 49-51 

(Editorial) 51-52 

Atnerican  (Official)  52-53 

(Editorial)    53-54 

To  purchase  the  telephone  and  telegraph  systems  in  the  United  States,  the  Govern- 
ment would  have  to  double  its  national  debt.  It  would  then  acquire,  not  a  financial 
asset,  but  a  liability,  unless  it  raised  rates  or  lowered  service  (See  "Comparative  Effi- 
ciency"). None  of  the  foreign  systems  are  known  to  produce  a  profit.  Many  produce 
hea\-y  deficits.  The  Post  Office  is  comparatively  simple  and  inexpensive  to  operate,  yet 
annual  deficits  force  it  to  the  public  purse  for  support.  The  infinitely  more  complex 
and  intricate  management  of  telephones  and  telegraphs  would  impose  a  far  greater 
drain  upon  the  public  exchequer,  which  would  invariably  find  its  way  to  the  taxpayer's 
pocket  (See  "Rates"  and  "Taxation"). 

Mismanagement 

Foreign  (Official) 54-56 

(Editorial) 56-58 

From  the  fact  that  what  is  everybody's  business  is  generally  nobody's,  that  governmental 
machinery-  is  designed  for  governing  rather  than  for  commercial  administration,  that 
"the  state  has  to  submit  to  too  many  influences  other  than  the  needs  of  the  public,"  that 
continuous  service  of  officials  and  thorough  familiarity  with  their  work — the  essentials 
of  efficient  management — are  impossible  under  political  administration,  mismanagement 
of  Government  telephone  and  telegraph  systems  has  followed  inevitably,  as  instances 
from  foreign  experience  strikingly  illustrate. 

Stagnation  vs.  Expansion 

Foreign  (Official) 58-60 

(Editorial) 60-62 

American  (Editorial) 62-63 

The  contention  that  Government  Ownership  makes  for  "social  utility"  by  serving  profit- 
able and  unprofitable  commimities  alike,  is  not  supported  by  the  facts.  The  United 
States,  with  5.5%  of  the  world's  population,  has  65%  of  the  world's  telephones. 
Europe,  with  its  Government-owned  systems,  has  four  times  the  population  of  the 
United  States,  but  much  less  than  half  the  number  of  telephones.  The  British  Post- 
master General  refuses  to  extend  telegraph  service  to  points  where  it  will  not  pay. 
European  Government  Telephone  Departments  have  exploited  the  larger  and  more 
profitable  communities,  and  comparatively  ignored  the  smaller  and  unprofitable  ones 
(See  page  60).  The  true  situation  is,  private  telephone  and  telegraph  systems  serve  a 
country  far  more  universally  than  Government  systems,  because  lack  of  commercial  in- 
centive under  Government  operation  breeds  stagnation,  whereas  the  watchword  of  pri- 
vate enterprise  is  expansion.  "Creative  epochs  in  industry  are  the  work  of  individuals, 
not  of  Governments." 

Financial  Constriction 

Foreign  { Official) 63-64 

(Editorial) 64-65 

American  (Editorial) 65 

The  high  standard  of  American  telephone  service  is  largely  the  result  of  proper  financ- 
ing.   Plans  laid  ten  and  twenty  years  in  advance  have  been  rigorously  backed  up  by 

5 


Pages 
the  necessary  investment.  The  money  spent  has  at  all  times  equalled  the  money  needed 
to  maintain  the  best  service  possible.  Government  systems,  on  the  contrary,  have  suf- 
fered from  financial  starvation.  Governments  are  incapable  of  consistent  financing. 
Plans  are  no  sooner  completed,  than  they  are  swept  away  by  new  administrations  with 
new  plans.  Appropriation  bills  are  framed  less  with  an  eye  to  what  is  required,  than  to 
what  can  be  obtained.  The  appropriations  voted  are  governed  less  by  the  commercial 
needs  of  the  service,  than  by  the  political  needs  of  the  moment. 

Taxation 

Foreign  {Editorial) 65 

American  {Editorial) 66-67 

Government  cannot  create  something  from  nothing.  Its  bills  must  be  paid  by  the  tax- 
payer. Any  increase  in  government  expense  increases  the  taxpayer's  burden,  and  adds 
that  much  to  the  "high  cost  of  living."  Should  the  Government  spend  a  billion  dollars 
on  telephones  and  telegraphs,  the  taxpayer  would  have  to  foot  the  bill.  Unless  it  in- 
creased telephone  and  telegraph  rates,  the  Government  would  have  to  run  at  a  loss 
(See  "Comparative  Efficiency"),  which  would  mean  an  annual  expense  item  to  the 
taxpayer,  for  the  benefit  of  a  new  army  of  Government  job-holders.  (See  "Ex- 
pense.") A  lowering  in  rates  would  be  but  a  new  form  of  class  legislation:  The  very 
poor  could  economize  on  telephones  and  telegraphs,  but  not  on  telephone  and  telegraph 
taxes.  (See  "Rates.")  The  public  debt  has  been  increasing  by  leaps  and  bounds:  wriy 
magnify  the  burden? 

Employees 

Foreign  {Official) 67-68 

{Editorial) 69-73 

American  { Official)  73-75 

(Editorial)    75-76 

Government  employment  appeals  mainly  to  those  who  are  willing  "to  mortgage  one's 
better  prospects  and  potentialities  in  the  boundless  world  of  individual  endeavor,"  for 
easy  positions  with  small  responsibility.  Nevertheless,  e.xperience  shows  that  Govern- 
ment is  not  a  model  employer.  It  overpays  incompetents  whose  only  asset  is  political 
"pull,"  and  underpays  the  meritorious.  It  recognizes  seniority  rather  than  ability. 
Experience,  foreign  and  .\merican,  shows  that  the  Government  lags  far  behind  private 
enterprise  in  treatment  of  employees,  not  only  as  to  pay  for  services  rendered,  but  as  to 
l)ensioiis,  compensation  for  injuries,  and  general  conditions  of  employment. 

Political  Aspect 

Foreign  ( Offiicial) 77-79 

{Editorial) 79 

American  {Official)  79-86 

{Editorial)    86-92 

Foreign  officials  admit  that  in  their  administration  of  telephones  and  telegraphs,  their 
hands  have  i)ecn  tied  by  partisan  influence,  and  their  services  debilitated  by  political 
contamination.  United  States  Congressmen  admit  that  the  "merit  system,"  in  the 
making  of  appointments,  has  been  "prostituted  to  politics."  In  the  United  States,  bosses 
are  far  more  strongly  entrenched,  political  machines  far  more  potent,  and  partisan  in- 
fluences far  more  pernicious,  than  in  Europe.  A  new  government  enterprise,  especially 
of  such  magnitude  as  the  telei)hone  or  telegraph,  would  furnish  new  strength  to  the 
boss,  new  fuel  for  the  political  machine,  new  fields  for  partisan  influence.  It  would 
weigh  down  civic  reform  with  an  added  handicap,  and  might  permanently  engraft  upon 
our  democratic  institutions  a  system  of  centralized  bureaucracy,  "a  huge  political 
I-'rankcnstein,  created  by  Democracy  for  its  own  eventual  destruction." 

6 


Regulation  vs.  Ownership 

Pages 

Official 92-93 

Editorial 93-96 

Public  Regulation  secures  to  the  public  all  the  advantages  of  private  ownership,  and 
eliminates  its  disadvantages.  The  Government  is  in  a  better  position  to  regulate  and 
check  abuses  of  private  corporations,  than  to  regulate  and  check  its  own.  For  example, 
it  has  rigidly  enforced  strict  standards  of  accounting  among  private  corporations, 
though  its  own  accounting  is  notoriously  lax  and  inadequate.  (See  "Arbitrary  and  Irre- 
sponsible Administration.")  It  would  be  the  height  of  folly  to  embark  upon  Govern- 
ment Ownership  just  when  Government  Regulation  is  beginning  to  show  what  it  can  do. 

Post  Office 

Official 96-98 

Editorial 98-102 

Government  management  of  the  Post  Office  is  no  precedent  for  Government  operation 
of  telephones  and  telegraphs.  The  postal  service  is  unique  in  its  simplicity  of  make-up 
and  ease  of  operation  ;  despite  which  it  meets  with  annual  dePcits,  even  though  millions 
in  expenses  annually  incurred  by  the  Post  Office,  are  charged  to  other  departments. 
Its  administration  by  the  Government  in  this  country  has  revealed  defects  which,  in 
more  complex  enterprises,  would  be  fatal  alike  to  good  government  and  good  service. 
The  argument  that  the  parcels  post  is  a  precedent  is  equally  unsupportable.  It  involved 
no  change  in  the  nature  of  Post  Office  work,  but  merely  increased  its  volume,  throwing 
the  brunt  of  the  added  load  upon  private  carriers. 


PUBLIC  SENTIMENT 
(Foreign) 

The  Times,  London,  England,  November  2,  1913: 

The  chorus  of  complaints  against  the  London  telephone  service  which  has  echoed  through  our 
columns  during  the  past  week  will,  it  may  be  hoped,  serve  as  a  corrective  of  the  prevailing  official  sat- 
isfaction with  the  British  system. 

The  Times,  London,  England,  May  18,  1912: 

The  experiment  of  the  Manitoba  Government  with  interior  grain  elevators  seems  to  have  resulted 
in  failure.  *  *  *  In  a  speech  in  the  Legislature,  the  Hon.  R.  P.  Roblin,  Provincial  Premier,  explained 
that  the  Government  embarked  upon  the  experiment  as  the  result  of  a  long  popular  agitation  in  which 
it  was  represented  that  the  grain  dealers  were  robbing  the  farmers  and  that  "the  panacea  is  to  be 
found  in  Government-owned  elevators."  He  added,  "I  took  the  voice  of  the  demagogue  as  the  voice  of 
the  public,  and  I  consequently  made  a  mistake." 

The  Daily  Mail,  London,  England,  February  5,  1912: 

The  complaints  of  telephone  users  grow  in  force  as  they  accumulate  in  numbers.  Every  class  of 
the  community  is  represented  in  the  increasing  army  of  disgusted  subscribers,  and  if  a  small  percentage 
of  the  complaints  which  pour  into  the  office  of  the  Daily  Mail  are  duplicated  to  the  newly  formed 
Telephone  L-sers'  Association  that  organization  will  find  its  hands  more  than  full. 

One  indignant  user  asks  what  would  be  the  advantage  to  the  community  of  the  nationalization  of 
the  railways,  land,  and  mines  if  the  new  telephone  system  is  an  example  of  efficiency  under  Government 
control.  Several  subscribers  write  that  complaints  to  officials  only  draw  stereotyped  acknowledgments. 
Apparently  the  replies  are  suggested  by  that  useful  post  office  volume  "The  Excuse  Book." 

The  Daily  Mail,  London,  England,  February  2,  1912 : 

The  widespread  dissatisfaction  with  telephone  services,  expressed  in  many  letters  in  the  Daily 
Mail  recently,  has  led  to  the  formation  of  a  Telephone  Users'  Association,  with  Mr.  Goldman,  M.P., 
as  chairman. 

The  Daily  Mail,  London,  England,  February  1,  1912: 

Many  complaints  about  the  inefficiency  of  the  telephone  service  continue  to  reach  the  Daily  Mail. 
The  Post  Office  may  say  that  the  staffs  and  the  system  are  the  same  as  they  were  under  the  National 
Telephone  Company,  but  the  fact  remains  that  subscribers  are  almost  unanimous  in  stating  that  since 
the  Post  Office  took  over  the  telephones  there  has  been  a  marked  decline  in  their  efficiency. 

(American) 

Washington,  D.  C,  Herald,  January  5,  1914: 

If  the  voice  of  the  press  of  the  country  affords  any  ckie  to  public  sentiment,  the  people  of  the 
countrj-  have  pronounced  with  practical  unanimity  against  Mr.  Burleson's  proposal. 

Paterson,  N.  J.,  Press,  December  24,  1913: 

The  press  of  the  country  without  discrimination  of  party,  has  with  practical  unanimity  declared 
the  project  («'.  e.,  the  proposal  for  government  ownership  of  telephone  and  telegraph)  untenable. 

9 


Brooklyn,  N.  Y..  Citizen.  December  11,  1913: 

There  are  so  many  other  matters  which  will  have  to  be  dealt  with  before  it  can  become  worth 
while  entering  into  any  detailed  argument  over  what  had  better  be  done  about  the  telegraph  and  tele- 
phone lines  that  the  question  must  remain  in  the  academic  list  on  this  side  of  the  Atlantic  for  another 
decade  at  least. 

It  is,  indeed,  true  that  there  are  not  a  few  intelligent  people  who  think  otherwise.  They  have 
become  convinced  in  various  ways  that  it  would  be  a  good  stroke  of  business  to  enter  these  fields  right 
away.  But  it  is  not  doubtful  that  the  great  majority  of  the  American  people  are  in  no  such  mood. 
The  complaints  of  the  two  services  have  been  so  few  and  are  really  so  trivial,  as  compared  with  other 
great  branches  of  industrial  life  that  call  for  attention,  that  the  average  American,  who  is  nothing  if 
not  practical,  declines  to  bother  himself  much  in  the  premises. 

Philadelphia,  Pa.,  Ledger  (Quoted  in  the  Rochester,  New  York,  Post  Express,  October  8, 
1913): 

For  Federal  regulation  of  interstate  concerns  the  nation  will  vote  its  indorsement.  For 
government  ownership  the  nation  will  vote  only  its  stoutest  condemnation. 

Rochester,  N.  Y.,  Union  Advertiser,  December  19,  1913: 

We  do  not  believe  that  the  people  want  government  ownership  of  the  telephone,  the  telegraph 
or  the  transportation  service.  The  present  laws  for  the  regulation  of  the  public  service  corporations 
seem  to  be  adequate. 

Baltimore,  Md.,  American,  December  16,  1913: 

It  may  also  be  said  that  the  control  of  the  wires  by  the  government  would  be  a  precursor  of 
conditions  such  as  exist  in  France,  where  the  labor  organizations  have  the  telegraph  and  telephone 
employes  of  the  government  in  their  fcUowshi])  and  thus  have  the  government  in  important  respects 
under  their  thumb.     .Ml  this  leads  to  outright  socialism.    The  United  States  wants  none  of  it. 

Pontiac,  Mich.,  Press,  December  23,  1913: 

Wouldn't  the  acquisition  of  telegraph  and  telephone  lines  pave  the  way  for  the  government 
ownership  of  railroads?  Would  the  service  be  any  better  than  it  is  now  and  could  the  government 
operate  these  industries  without  loss,  or  friction,  or  political  interference?  Wouldn't  there  be  many 
problems  from  which  we  are  now  free?  In  brief,  is  there  a  public  demand,  a  public  necessity,  for 
such  a  step,  and  would  it  be  advantageous  to  the  government  and  the  public  to  undertake,  in  these  cir- 
cumstances, a  move  in  a  direction  that  may  be  wrong?  Mr.  Burleson  seems  to  be  confident,  but  as  we 
see  it,  is  on  very  uncertain  ground. 

St.  Paul.  Minn.,  Dispatch,  October  9,  1913: 

Even  a  Congress  of  radical  Democratic  persuasion  would  gag  at  the  thought  of  plunging  the 
country  into  a  system  which  is  unsuccessful  abroad  and  from  which  the  three  leading  foreign  nations 
would  gladly  escape  if  they  could  enjoy  the  benefits  of  modernized  American  services. 

Jacksonville,  111.,  Courier,  December  19,  1913: 

We  arc  justly  jealous  of  the  extension  of  government  activities,  and  we  have  not  as  a  nation  felt 
called  on  to  do  for  the  people  what  other  agencies  could  do  as  well. 

Chicago,  111.,  Journal,  December  22,  1913 : 

The  best  thing  about  the  peaceful  dissolution  of  the  telegraph  and  telephone  trust  is  the  evi- 
dence it  affords  that  President  Wilson  has  no  intention  of  adopting  the  suggestion  of  his  postmaster 
general,  and  moving  for  immediate  government  ownership  and  operation  of  telegraph  and  telephone 
lines. 

•**•♦**♦»♦♦* 

The  country  is  to  be  congratulated  on  the  very  evident  fact  that  his  recommendations  are  not  to 
be  followed. 

10 


Buffalo.  N.  Y..  Enquirer,  December  22.  1913: 

Those  who  question  the  wisdom  of  government  ownership  merely  as  a  business  proposition, 
however,  are  only  a  part  of  the  array  in  opposition.  Another  very  strong  corps  of  objectors  hold  that 
running  telegraph  and  telephone  systems  is  not  suitable  work  for  the  United  States  government. 

Mansfield.  O.,  Nezcs,  February  5,  1914: 

The  more  closely  this  policy  is  examined,  the  more  hopeless  does  it  appear.  The  question,  of 
course,  is  a  pvolitical  as  well  as  a  business  one.  If  we  desire  a  great,  powerful,  centralized  Govern- 
ment we  can  go  far  toward  the  realization  of  our  wish  by  putting  it  in  charge"  of  the  railroads  and 
other  business  enterprises.  By  so  doing,  we  shall  greatly  weaken,  and  perhaps  destroy,  those  very 
institutions  designed  by  wise  men  to  hold  despotism  in  check  and  to  safeguard  the  independence, 
initiative,  and  freedom  of  the  citizen.  We  should  have  an  army  of  voters  bound  to  the  state — that  is, 
the  administration — by  the  closest  and  most  selfish  ties,  and  strong  enough  to  mold  it  to  their  purposes. 

Men  are,  we  believe,  beginning  to  see  the  dangers  inherent  in  this  whispered  program.  Many 
who  in  I  heir  hearts  oppose  it  and  shrink  from  it,  have  made  the  mistake  of  talking  and  thinking  of  it  as 
"inevitable."  Nothing  is  inevitable  as  long  as  there  is  the  slightest  chance  of  preventing  it.  Those  who 
are  proposing  to  "accept"  what  they  think  they  can  not  head  off,  ought,  we  think,  to  express  them- 
selves clearly  and  forcibly.  We  believe,  as  we  have  said,  that  public  opinion,  as  a  whole,  is  far  from 
favorable  to  this  plan.    It  is  a  grave  mistake  to  interpret  silence  as  acquiescence. 

Syracuse,  X.  Y.,  Journal,  December  18.  1913: 

There  is  no  general  demand  for  the  Federal  government  to  buy  the  telegraph  lines.  There  is 
no  great  necessity  for  such  an  act.  Widespread  as  is  its  use,  necessary  as  it  has  become  in  business 
circles  and  great  as  is  its  convenience  in  the  home,  it  has  not  yet  reached  that  place  in  the  affairs  of  man 
where  Uncle  Sam  should  feel  even  the  suspicion  of  a  need  to  take  over  the  mighty  system  in  order 
that  he  might  furnish  cheaper  service. 


ECONOMIC   ASPECT 

Speech  of  Representative  Lewis  on  Telephones  and  Telegraphs  before  Congress  on  December 
22,  1913: 

Mr.  Speaker,  there  is  a  science  of  political  economy ;  it  speaks  with  an  authority,  not  to  say 
with  a  thoroughness  of  analysis  and  breadth  of  view,  which  I  could  not  claim.  It  speaks,  too,  with  a 
responsible  sense,  a  knowledge  of  these  perplexing  varieties  and  complexities  of  modern  society  and 
industry. 

From  statement  made  by  Thomas  Jefferson  in  1808: 

Having  always  observed  that  public  works  are  much  less  advantageously  managed  than  the 
same  are  by  private  hands,  I  have  thought  it  better  for  the  public  to  go  to  market  for  whatever  it 
wants  which  is  to  be  found  there. 

From  "The  Wealth  of  Nations,"  by  Adam  Smith  (1776,  Vol.  II,  Bk.  V.,  Ch.  II.  p.  300: 
The  Post  Office  is  properly  a  mercantile  project.  The  government  advances  the  expense  of 
establishing  the  different  offices,  and  of  buying  or  hiring  the  necessary  horses  or  carriages,  and  is 
repaid  with  a  large  profit  by  the  duties  upon  what  is  carried.  It  is  perhaps  the  only  mercantile  pro- 
ject which  has  been  successfully  managed  by,  I  believe,  every  sort  of  government.  The  capital  to  be 
advanced  is  not  very  considerable.  There  is  no  mystery  in  the  business.  The  returns  are  not  only 
certain,  but  immediate. 

11 


From  "Principles  of  Economics,"  (1911,  Volume  II,  Book  VII,  Chapter  62,  Page  409),  by  F. 
W.  Taussig,  Professor  of  Political  Economy  at  Har^'ard  University: 

The  continued  progress  which  it  (i.  e.  government  ownership)  should  maintain  calls  for  keen- 
ness, vigor,  enthusiasm,  single-minded  devotion  to  jjrofessional  tasks  on  the  part  of  trained  adminis- 
trators and  experts.  Only  an  intelligent  and  self-restrained  democracy,  or  a  very  capable  autocracy, 
can  enlist  such  men  and  get  them  to  do  their  work  in  the  best  spirit.  The  German  Empire  and  the 
German  states,  in  their  post  office,  telegraph  and  telephone,  perhaps  in  their  railways,  unmistakably 
in  their  military  organization,  have  maintained  a  high  spirit  of  ambition  and  emulation.  But  the 
Australian  colonies  se£m  to  have  secured  simply  humdrum  management ;  honest,  to  be  sure  (and  for 
this  much  we  in  the  United  States,  to  our  shame,  must  pay  our  tribute  of  respect),  but  devoid  of  life 
and  vigor.  No  democratic  community,  with  the  possible  exception  of  Switzerland,  has  shown  in  its 
public  industry  a  spirit  of  progress  comparable  to  that  of  private  industry. 

From  an  article  by  Dr.  Jacob  Gould  Schurman,  President  of  Cornell  University,  published  in 
the  New  York  Tribune,  February  25,  1912: 

In  the  United  States  the  central  government  possesses  under  the  Constitution  a  minimum  of 
governmental  functions.  Yet  even  among  us  the  public  business  is  conducted  with  much  less  energy 
and  efficiency  than  private  business.  Although  some  European  states  own  and  manage  the  railways 
— never,  however,  with  great  success — we  hesitate  to  invest  our  government  with  this  function  because 
of  its  incompetency  as  a  business  agent  and  the  inefficiency  to  which  it  is  doomed  by  partisan  politics. 

From  "Public  Finance,"  (3rd  Edition,  1903,  Book  II.,  Chapter  3,  Pages  228-229),  by  C.  F. 
Bastablc,  Professor  of  Political  Economy  at  the  University  of  Dublin,  Ireland: 

One  difficulty  common  to  most  forms  of  state  industry  arises  from  the  necessity  of  dealing 
with  large  numbers  of  employees.  The  tasks  of  the  modern  State  are  sufficiently  varied  and  compre- 
hensive to  take  up  all  the  ability  and  time  of  administrators,  without  adding  unnecessarily  to  their 
duties.  Public  industries,  however,  require  for  their  efticient  working  a  body  of  organized  hands, 
obtained  by  free  contract.  An  unavoidable  consequence  is  the  possibility  of  disagreement  between 
the  State  and  its  helpers,  culminating  perhaps  in  the  last  weapon  of  industrial  war — strikes.  *  *  * 
That  this  is  not  an  imaginary  danger  is  proved  by  the  fact  that  in  July,  1890,  there  were  "strikes"  at 
the  municipal  gasworks  in  Leeds,  at  the  London  Post  Office,  and  in  the  Metropolitan  Police,  and  also 
a  "mutiny"  in  the  Guards! 

Frum  "Railroad  Transportation"  (1885,  Chapter  13,  Page  257),  by  Anhin  T.  Hadley,  LL.  D., 
President  of  Yale  University : 

Government  ownership  of  the  telegraph  prevailed  in  Continental  Europe,  because  each  country 
was  more  or  less  of  a  bureaucracy ;  that  is.  the  civil  service  governed  the  country,  ^nd  was  so  well 
organized  that  it  extended  itself  as  a  matter  of  course.  In  America  the  civil  service  is  not  so  well 
organized,  does  not  govern  the  country,  and  is  not  allowed  to  extend  itself  as  a  matter  of  course. 
Political  reasons  decided  the  question  in  favor  of  a  government  telegraph  in  Europe.  Political 
reasons  form  the  main  ground  against  a  government  telegraph  in  the  United  States. 

From  the  i.rcfacc  to  "The  History  of  the  British  Post  Office,"  by  J.  C.  Hemmeon,  Ph.D.,  pub- 
lished under  the  direction  of  the  Department  of  Economics,  as  Volume  VII  of  the  Harvard  Economic 
Studies  (January,  1912) : 

Possibly  a  democratic  type  of  government  should,  from  the  financial  point  of  view,  interfere 
least  in  the  direct  management  of  economic  institutions,  on  account  of  the  pressure  which  can  easily 
be  brought  to  bear  upon  it  for  the  extension  of  such  institutions  on  other  than  economic  grounds.  If 
non-economic  principles  are  to  be  substituted  in  justifying  the  initiation  or  increase  of  government 
ownership,  a  popular  form  of  government  seems  the  least  suitable  for  the  i)rcsentation  of  such  as  shall 
be  fair  to  all  concerned,  not  to  mention  the  dilTicult  proi)lem  of  dealing  with  those  members  of  the 
civil  service  who  do  not  hesitate  to  make  use  of  their  political  power  to  enforce  their  demands  upon  the 
government. 

12 


From  "The  Principles  of  Political  Economy,"  (1864,  5th  edition.  Part  1,  Chapter  9,  Pages  218 
and  231),  by  J.  R.  McCuUoch: 

Perhaps,  with  the  single  exception  of  the  conveyance  of  letters  there  is  no  branch  of  industry 
which  government  had  not  better  leave  to  be  conducted  by  individuals. 


It  cannot,  however,  be  too  strongly  impressed  upon  those  in  authority,  that  non-interference 
should  be  the  leading  principle  of  their  policy,  and  interference  the  exception  only;  that  in  all  ord- 
inary' cases  individuals  should  be  left  to  shape  their  conduct  according  to  their  own  judgment  and 
discretion;  and  that  no  interference  should  ever  be  made  on  any  speculative  or  doubtful  grounds,  but 
only  when  its  necessity  is  apparent,  or  when  it  can  be  clearly  made  out  that  it  will  be  productive  of 
public  advantage. 

From  "Expansion  of  Races,"  (1909,  Chapter  XXVIII,  Page  433),  by  Charles  Edward  Wood- 
ruff, A.M.,  M.D: 

Hugo  R.  Meyer,  formerly  Professor  of  Political  Economy  in  the  University  of  Chicago,  has 
investigated  this  matter  for  many  years,  *  *  *  He  proves  conclusively  that  it  is  always  a  disaster 
to  the  society  if  the  ruling  units  take  charge  of  matters  which  the  working  units  alone  are  able  to  do. 
The  delusion  is  widespread  that  if  government  only  take  charge  of  something  it  is  done  properly,  even 
though  it  has  not  the  brains  or  bodies  to  work  with.  It  is  forgotten  that  the  brains  of  the  country  are 
apt  to  be  in  the  employ  of  corporations  and  will  not  work  for  the  poor  pay  of  government  office.  The 
delusion  arises  in  the  lower  layers  of  society—  -the  less  intelligent  ruled  elements — which  always  look 
up  to  the  rulers  to  initiate  and  manage  everything  for  them.  It  is  the  Russian  peasant's  stupid  way 
of  demanding  everything  of  "The  little  father" — the  Czar.  It  is  the  sign  of  racial  childishness  and  the 
opposite  of  the  Aryan  democratic  spirit.  Meyer  proves  that  State  ownership  or  regulation  invariably 
paralyzes  industry  because  it  interferes  with  that  private  initiative  which  has  made  America  the  leader. 
*  *  *  In  the  great  public  utilities,  telegraph,  telephone,  trolley  lines,  railroads,  lighting  power,  we 
lead  the  world.  State  management  in  Europe  has  paralyzed  advancement — individual  liberty  in 
America  has  pushed  it. 

From  a  speech  by  Charles  E.  Hughes,  Justice  of  the  United  States  Supreme  Court  and  ex- 
Governor  of  New  York;  delivered  before  the  Republican  Club  of  the  City  of  New  York,  January  31, 
1908: 

Our  government  is  based  upon  the  principles  of  individualism  and  not  upon  those  of  socialism. 


We  do  not  seek  to  multiply  the  activities  of  government  so  as  to  bring  about  vexatious  inter- 
ference with  liberty  or  to  restrict  legitimate  enterprise.  We  deprecate  all  unnecessary  governmental 
action.  But  our  individualism  does  not  justify  unbridled  license.  Its  aims  may  demand,  and  fre- 
quently do  demand,  the  intervention  of  government  with  necessary  restrictions  and  regulations,  not  to 
curtail  the  liberty  of  the  people,  but  to  protect  it. 

From  the  Congressional  Record,  January  15,  1914,  p.  1753: 

MR.  MOON.  *  ♦  *  If  you  shall  adopt  the  policy  of  the  purchase  of  the  telegraphs  and  tele- 
phones, you  will  have  proceeded  far  to  the  federalization  of  power.  You  will  have  added  thousands  of 
offices  to  your  Government.  If  you  should  go  further  and  become  the  owners  of  the  railroads,  you 
would  see  a  vast  army  of  people  who  would  be  in  control,  a  Federal  menace  to  human  rights  and 
human  liberty  under  a  Constitution  and  laws  in  which  the  people  have  no  part  in  selecting  the  officers 
to  administer. 

Macon,  Ga.,  News,  December  19,  1913 : 

John  Stuart  Mill,  one  of  the  clearest  and  most  profound  thinkers  of  the  nineteenth  century, 

13 


applied  his  practical  philosophy  to  the  subject  of  government  ownership,  and  among  other  things  he 

said: 

A  cogent  reason  for  restricting  the  interference  of  government  is  the  great  evil  of 
adding  unnecessarily  to  its  power.  Every  function  superadded  to  those  already  possessed  by 
the  government  causes  its  influences  over  hopes  and  fears  to  be  more  widely  diffused,  and 
converts,  more  and  more,  the  active  and  ambitious  part  of  the  public  into  hangers-on  of  the 
government.  If  the  roads,  the  railways,  the  banks,  the  insurance  offices,  the  great  joint  stock 
companies,  the  universities,  and  the  public  charities,  were  all  of  them  branches  of  the  gov- 
ernment;  if  the  employees  of  all  these  difTerent  enterprises  were  appointed  and  paid  by  the 
government,  and  looked  to  the  government  for  every  rise  in  life;  not  all  the  freedom  of  the 
press  and  the  popular  constitution  of  the  legislature  would  make  this  or  any  other  country 
free  otherwise  than  in  name.  And  the  evil  would  be  greater,  the  more  efficiently  and  scien- 
tifically the  administrative  machinery  was  constructed. 

He  declared  also  that  the  perfection  of  government  ownership  would  establish  an  in- 
iquitous bureaucracy. 

Philadelphia,  Pa.,  Public  Ledger,  October  26,  1913 : 

In  the  new  edition  of  the  "American  Commonwealth,"  James  Bryce  says  that  the  railroads  can- 
not be  taken  over  in  this  country  and  worked  by  the  National  Government  as  the  railways  of  Switzer- 
land and  many  of  those  in  Germany  and  the  Austro-Hungarian  monarchy.     And  he  added: 

"Only  the  most  sanguine  state  socialist  would  propose  to  impose  so  terrible  a  strain  on  the  virtue 
of  the  American  politician,  not  to  speak  of  the  effect  on  the  constitutional  balance  between  the  States 
and  the  Federal  authority." 

St.  Louis,  Mo.,  Times,  December  22,  1913: 

Incentive  to  achievement  along  individual  lines  cannot  be  taken  away  from  a  people  save  to 
their  great  detriment.  The  fundamental  principles  of  Republican  form  of  government  are  best  exem- 
plified by  as  little  government  as  possible,  and  not  by  as  much  as  possible. 

San  Antonio,  Tex.,  Express,  December  19,  1913: 

The  argument  that  the  United  States  is  the  only  one  of  the  leading  countries  of  the  world  that 
is  not  0])erating  telegraph  lines  is  *  *  *  specious,  because  this  country  lias  a  form  of  government 
different  from  that  of  most  of  the  other  great  nations,  which  cost  many  thousands  of  lives  to  estab- 
lish, and  that  has  been  the  admiration  of  all  the  world.  This,  the  people  of  the  United  States  will  not 
willingly  relinquish  for  a  monarchical  or  centralized  form  of  government,  towards  which  it  might  be 
headed  were  Mr.  Burleson's  policy  carried  out. 

Philadelphia,  Pa.,  Public  Ledger,  December  IX.  1913: 

Mr.  Burleson  might  go  further;  if  communication  of  intelligence  is  important,  so  is  transporta- 
tion of  both  human  beings  and  freight,  and  therefore  the  next  logical  step  would  be  the  ownership  of 
our  twenty  billions  of  dollars  worth  of  railways.  Transportation  of  foodstuffs  is  important,  but  more 
important  yet  is  the  food.  How  can  a  prudent  and  wary  Government  permit  the  nation  to  be  endan- 
gered by  allowing  the  farmers  and  other  busy-bodies  to  retain  in  their  private  possession  the  very  staff 
of  life?  That  would  be  foolish,  of  course,  and  therefore  a  beneficent  paternal  Government  should, 
logically,  control  the  means  of  production  as  well  as  the  instruments  of  transportation  and  of  commun- 
ication. But  whence  originate  the  food-stuffs  and  other  necessaries  of  life?  From  this  goodly  earth; 
from  the  land,  which,  combined  with  labor,  is  the  source  of  practically  all  wealth :  is  it  safe  to  leave  the 
land  in  private  hands?  I^gic — the  Burlesonian  communistic,  socialistic,  Texas  logic — compels  a 
logical  statesman  to  conclude  that  the  land  must  be  owned,  controlled  and  tilled  by  the  Government. 

From  "The  Science  of  Finance,"  by  Professor  H.  C.  Adams  (1898:  Part  II,  Bk.  I,  Ch.  2, 
Pages  274-5) : 

If  it  be  true,  as  has  been  argued  in  the  courts,  that  an  increase  in  the  volume  of  the  telephone 

14 


business  beyond  a  certain  point  necessitates  a  corresponding  increase  in  expenses,  this  fact  exclutles 
the  telephone  industry  from  the  class  of  industries  industrially  monopolistic. 

From  "Economics,"  by  Professor  A.  T.  Hadlev.  President  of  Vale  University  (1896,  Pages 
170-1): 

Shall  telephone  charges  be  based  on  the  message,  as  in  long-distance  business,  or  on  the  instru- 
ment, as  in  the  ordinary  local  business  ?  The  former  is  the  more  logical  basis,  but  it  involves  decided 
difficulties.  The  public,  in  local  telephone  exchanges,  distinctly  prefers  the  latter  method.  But  if  a 
company  charges  by  the  instrument  and  not  by  the  message,  we  are  brought  face  to  face  with  the 
remarkable  fact  that  the  expenses  per  unit  increase  with  an  increase  in  the  volume  of  business  done. 
In  a  town  with  only  100  telephones  in  operation,  the  expense  to  the  company  per  instrument  and  the 
rate  which  can  be  profitably  charged  is  far  less  than  in  a  city  with  1,000  instruments.  In  the  one  case, 
it  need  only  be  prepared  to  make  ninety-nine  connections  for  each  subscriber ;  in  the  other,  it  must  ar- 
range for  nine  hundred  and  ninety-nine.  This  will  serve  to  illustrate  the  highly  experimental  character 
of  the  problem  of  rate-making  in  the  newer  forms  of  industry.  It  is  difficult  enough  for  the  investors  to 
find  agents  who  can  be  trusted  to  experiment  with  projierty  uiulcr  these  conditions.  Still  more  difti- 
cult  is  it  to  find  public  officials  who  can  be  trusted  to  experiment  with  other  people's  property. 

From  "Introduction  to  Economics,"  by  Professor  H.  R.  Seager,  of  Columbia  University  (3rd 
Edition,  1905,  Ch.  23,  Legal  and  Natural  Monopolies,  pages  450-2) : 

It  («.  e.  the  telephone  service)  is  not  subject  to  the  law  of  decreasing  expense.  On  the  contrary 
electrical  engineers  maintain,  and  with  apparent  reason,  that  the  larger  the  number  of  subscribers 
served  through  one  exchange  the  larger  is  the  expense  per  subscriber  of  rendering  the  service.  This 
is  because  the  exchange  stations  must  be  so  arranged  that  each  new  subscriber — or  pair  or  quartette 
of  subscribers  where  two  or  four  party  lines  are  used — may  have  his  wire  connected  readily  by  each  of 
the  many  operators  required  in  a  large  office  with  that  of  any  other  subscriber.  If  one  operator  is  able 
to  attend  to  the  calls  of  fifty  subscribers  and  the  office  serves  one  thousand,  this  necessitates  twenty 
diflferent  terminals  at  the  exchange  for  each  wire.  If  the  number  of  subscribers  doubles,  each  separ- 
ate wire  must  be  let  in  at  forty  points.  If  five  thousand  subscribers  are  to  be  served,  each  wire  must 
have  one  hundred  distinct  terminals.  In  this  way  the  expense  at  the  central  office  increases  by  multi- 
plication rather  than  by  addition.  For  five  thousand  subscribers  not  five  times,  but  twenty-five  times 
as  many  connections  are  needed  as  for  one  thousand.  Xor  is  there  the  saving  of  expense  outside  the 
central  office  in  the  telephone  business  that  is  to  be  found,  for  example,  in  connection  with  electric- 
lighting.  For  the  best  service  it  is  necessary  to  have  a  distinct  wire  for  each  new  subscriber.  Fair 
service  can  be  given  to  two  parties  on  the  same  line.  Four-party  lines  are  less  satisfactory.  Lines 
serving  more  than  four  have  been  found  to  work  so  badly  that  they  are  now  little  used  in  cities.  Thus 
as  regards  outside  wiring  the  expense  grows  uniformly  with  the  number  of  subscribers.  There  are, 
of  course,  on  the  other  hand,  economies  in  administration,  etc.,  which  result  from  an  increase  in  the 
number  of  subscribers  and  which  must  be  taken  into  account.  On  the  whole  it  appears  to  be  true, 
however,  that  increasing  rather  than  diminishing  expense  is  the  law  of  growth  in  the  telephone  busi- 
ness. 


FOREIGN  EXPERIENCE  NO  PRECEDENT 

From  "Modern  Industrialism,"  (1904,  Part  III.  Chapter  4,  Pages  270-1),  by  P.  L.  McVey, 
President  of  the  University  of  North  Dakota. 

What  may  be  accomplished  under  a  monarchy  by  a  centralized  government  is  a  markedly 
different  thing  from  the  results  likely  to  come  from  a  government  under  a  democracy.  .Australia 
stands  as  an  example  of  democratic  administration.  The  governments  are  by  no  means  so  free  from 
political  influences  as  those  of  Germany  and  do  not  ofTer  such  excellent  results.  But  on  the  other  hand 
the  experience  of  Australia  would  be  nearer  what  might  be  expected  in  England  or  America,  were  the 
state  system  introduced  rather  than  that  of  the  German  States. 

15 


The  administration  of  the  AustraUan  railroad  is  pretty  well  typified  by  a  statement  of  Sir 
George  Turner  to  the  effect  that  no  man  of  the  class  (naming  a  number  of  high  grade  managers) 
would  leave  England  to  enter  the  services  of  an  Australian  colony.  The  parliaments  have  insisted  upon 
the  retention  of  staffs  created  under  political  managements  of  former  administrations  and  have  inter- 
fered with  the  transactions  of  the  railroad  departments  for  political  reasons.  The  railroads  are 
starved  because  of  the  heavy  demands  upon  the  treasury  for  other  purposes,  the  result  is  poorly 
equipped  roads  carrying  small  train  loads  at  high  cost  per  ton  mile.  Expenses  are  not  always  paid 
out  of  current  income  and  resort  is  had  to  borrowing  that  materially  increases  the  public  debt. 
Demands  of  all  kinds  are  made  by  every  class,  from  every  section  and  these  are  of  such  a  nature 
that  they  preclude  anything  like  management  on  the  long-sighted  principle ;  the  roads  are  run  for  the 
present  and  with  the  future  in  view.  The  errors  of  judgment  are  not  written  off  as  in  the  case  of  a 
private  company  but  are  laid  upon  the  taxpayer,  whose  very  industry  is  burdened  by  a  condition  over 
which  he  has  no  control.  The  results  in  Australia  may  be  summed  up  in  three  brief  statements:  (1) 
Systematic  borrowing  until  the  State  Debt  is  beyond  any  reasonable  limit ;  (2)  dependence  upon  the 
State  for  employment  without  reference  to  the  product;  (3)  reliance  upon  government  borrowing  for 
continuance  of  prosperity.  These  in  addition  to  high  rates  and  inefficient  management  complete  the 
record  of  the  Australian  systems. 

From  "Aspects  of  Public  Ownership,"  by  Sydney  Brooks,  published  in  the  North  American 
Review,  August,  1911,  Pages  206-207: 

Another  set  of  considerations  that  are  even  more  relevant  concern  not  so  much  the  kind  of 
undertaking  that  it  is  proposed  to  nationalize  or  municipalize  as  the  kind  of  people  who  will  have  the 
management  of  it  when  it  passes  under  public  control — their  political  traditions  and  habits,  their 
administrative  e.\perience  and  efficiency,  their  standards  of  official  honesty,  the  whole  environment 
and  atmosphere  in  which  they  will  be  called  upon  to  discharge  their  functions.  Here,  again,  it  is  not 
possible  to  lay  down  any  hard  and  fast  rule.  But  at  the  same  time,  it  is  not  merely  possible  and 
permissible,  but  vitally  essential  to  insist  that  the  differences  between  towns  and  countries  in  external 
circumstances,  political  formation  and  character,  industrial  instincts  and  administrative  aptitudes,  are 
just  as  great  as  between  individuals,  and  that  these  differences  profoundly  affect  the  problems  of 
Public  Ownership  and  make  it  more  than  usually  imperative  to  submit  the  argument  from  analogy 
to  a  merciless  dissection.  Local  and  national  ownership  and  operation  of  the  chief  public  services 
will  be  one  thing  in  a  country,  like  Germany,  where  the  bureaucratic  tradition  is  strong  and  individual 
initiative  perceplii)ly  weaker  than  collective  initiative,  and  another  thing  in  a  country,  such  as  the 
United  States,  where  the  best  brains  are  to  be  looked  for  outside  of  the  municipal.  State  and  Federal 
Governments  and  where  the  unit  has  consistently  shown  itself  iinmeasurably  more  enterprising  and 
efficient  than  the  group.  *  *  *  An  enterprise  that  is  conducted  successfully  and  with  economv  under 
a  stable  administrative  system  may  break  down  altogether  under  a  regime  that  favors  a  succession  of 
officials  on  short  or  precarious  tenures  or  that  is  exposed  to  the  unremitting  pressure  of  commercial 
or  political  interests. 

From  "Principles  of  Economics"  (1910,  6th  edition,  .\ppendix  A,  Page  753),  by  Alfred  Mar- 
shall, one  time  Professor  of  Political  Economy  at  Cambridtjc  University: 

In  Germany  an  exceptionally  large  part  of  the  best  intellect  in  the  nation  seeks  for  employment 
under  Government,  and  there  is  probably  no  other  Government  which  contains  within  itself  so  much 
trained  ability  of  the  highest  order.  On  the  other  hand  the  energy,  the  originality  and  the  daring  which 
make  the  best  men  of  business  in  England  and  America  have  but  recently  been  fully  developed  in 
Germany ;  while  the  German  people  have  a  great  faculty  of  obedience.  They  thus  diflfer  from  the 
English  whose  strength  of  will  makes  them  capable  of  thorough  discipline  when  strong  occasion 
arises  but  who  are  not  naturally  docile.  The  control  of  industry  by  Government  is  seen  in  its  best 
and  most  attractive  forms  in  Germany ;  and  at  the  same  tinie  the  special  virtues  of  private  industry, 
its  vigor,  its  elasticity  and  its  resource  are  beginning  to  be  seen  in  full  development  there.  In  conse- 
quence the  problems  of  the  economic  functions  of  Government  have  been  studied  in  Germany  with 

16 


great  care,  and  with  results  that  may  be  very  instructive  to  Enghsli-speaking  people;  provided  they 
recollect  that  the  arrangements  best  suited  for  the  German  character  are  perhaps  not  quite  the  best 
for  them;  since  they  could  not,  if  they  would  rival  the  Germans  in  their  steadfast  docility,  and  in 
their  easy  contentment  with  inexpensive  kinds  of  food,  clothing,  house-room  and  amusements. 

From  'Municipal  Ownership  In  Great  Britain,"  by  Professor  Hugo  R.  Meyer,  1906,  Chapter  6, 
p.  114: 

In  the  days  of  Adam  Smith,  speakers  and  writers  on  questions  of  public  policy,  when  con- 
fronted with  perplexing  problems,  used  to  surmount  the  difiiculty  by  saying,  "It  has  been  done  in 
China."  The  public  speakers  and  writers  of  to-day  make  a  similar  use  of  Germany,  Australia,  and 
New  Zealand,  countries  concerning  which  the  general  public  has  acquired  more  misinformation  than 
an  energetic  and  well-informed  man  could  correct  in  a  lifetime. 

From  'Principles  of  Economics"  (1911,  Volume  II,  Book  VII,  Chapter  62,  page  409),  by  F. 
W.  Taussig,  Professor  of  Political  Economy  at  Harvard  University: 

The  continued  progress  which  it  (i.  e.  government  ownership)  should  maintain  calls  for  keen- 
ness, vigor,  enthusiasm,  single-minded  devotion  to  professional  tasks  on  the  part  of  trained  adminis- 
trators and  experts.  Only  an  intelligent  and  self-restrained  democracy,  or  a  very  capable  autocracy, 
can  enlist  such  men  and  get  them  to  do  their  work  in  the  best  spirit.  The  German  Empire  and  the 
German  states,  in  their  post  office,  telegraph  and  telephone,  perhaps  in  their  railways,  unmistakably  in 
their  military  organization,  have  maintained  a  high  spirit  of  ambition  and  emulation.  But  the  Austra- 
lian colonies  seem  to  have  secured  simply  hundrum  management ;  honest,  to  be  sure  (and  for  this 
much  we  in  the  United  States,  to  our  shame,  must  pay  our  tribute  of  respect),  but  devoid  of  life  and 
vigor.  No  democratic  community,  with  the  possible  exception  of  Switzerland,  has  shown  in  its  public 
industry  a  spirit  of  progress  comparable  to  that  of  private  industry. 

From  "Railroad  Transportation"  (1885,  Chapter  13,  Page  257),  by  Arthur  T.  Iladley,  LL.D., 
President  of  Yale  University  : 

Government  ownership  of  the  telegraph  prevailed  in  Continental  Europe,  because  each  country 
was  more  or  less  of  a  bureaucracy;  that  is,  the  civil  service  governed  the  country,  and  was  so  well  or- 
ganized that  it  extended  itself  as  a  matter  of  course.  In  America  the  civil  service  is  not  so  well  or- 
ganized, does  not  govern  the  country,  and  is  not  allowed  to  extend  itself  as  a  matter  of  course.  Poli- 
tical reasons  decided  the  question  in  favor  of  a  government  telegraph  in  Europe.  Political  reasons 
form  the  main  ground  against  a  government  telegraph  in  the  United  States. 

From  The  Nation  (New  York),  March  14,  1912: 

We  subscribe  to  no  such  dogma  as  the  "impossibility"  or  "absurdity"  of  government  owner- 
ship or  management  of  public  utilities.  It  is  all  a  question  of  expediency — a  question,  to  be  sure, 
turning  often  on  extremely  broad  and  deep  considerations,  and  not  merely  on  the  immediate  facts  of 
a  given  case,  but  still  a  question  of  expediency.  It  is  fair  to  acknowledge,  and  to  take  for  what  it  is 
worth,  such  an  experience  as  that  of  Switzerland,  especially  as  Switzerland  is  a  democratic  republic. 
But  before  we  jump  to  conclusions  regarding  our  own  country,  we  must  look  certain  large  and  vital 
facts  in  the  face.  Of  these,  the  most  obvious  relates  to  the  mere  geography  and  history  of  the  coun- 
try. The  United  States  is  a  vast  new  country,  whose  area — we  speak  of  the  contiguous  territory,  not 
counting  Alaska,  or  the  insular  possessions — is  3,000,000  square  miles;  Switzerland  is  an  ancient  and 
fully  settled  country,  with  an  area  of  16,0(X)  square  miles.  Texas  alone  could  swallow  up  sixteen 
Switzerlands,  and  the  population  of  Texas  is  barely  more  than  that  of  Switzerland.  It  would  take 
nine  Switzerlands  to  make  a  Montana,  but  the  people  of  Montana  are  only  one-tenth  as  many  as  those 
of  Switzerland.  Evidently,  the  problem  of  reconciling  the  demands  of  the  present,  and  of  weighing 
the  needs  of  the  future,  for  this  vast  Continental  area,  filled  with  a  restless,  energetic  and  rapidly 
growing  population  and  big  with  mighty  changes  almost  from  year  to  year,  is  not  to  be  compared  with 
that  presented  by  the  transportation  problems  of  the  compact  and  ancient  little  mountain  republic  of 
Europe. 

17 


From  "Aspects  of  Public  Ownership,"  by  Sidney  Brooks,  published  in  the  North  American 
Review,  August,  1911,  pages  200-201 : 

*  *  *  One  of  the  most  common  and  preposterous  fallacies  of  our  times  is  to  suppose  that  there 
are  any  political  dogmas  which  are  universally  true  or  any  political  prescription  which  can  be  applied 
indiscriminately  or  any  political  machinery  which  does  not  depend  for  nine-tenths  of  its  value  upon 
the  engineers  and  the  local  conditions  under  which  they  work.  *  *  *  The  t)'pe  of  mind  which  argues 
that  because  Glasgow  has  made  a  success  in  owning  and  operating  the  local  service  of  street-cars, 
therefore  Pittsburg  or  San  Francisco  would  be  equally  successful  and  should  at  once  follow  in  Glas- 
gow's footsteps,  is  a  type  of  mind  that  really  ought  not  to  be  allowed  to  meddle  with  politics.  It  is 
fundamentally  incapable  of  appreciating  the  fact  that  the  forces  which  determine  the  success  or  fail- 
ure of  any  and  every  political  experiment  are  infinitely  more  local  than  general  and  more  personal 
than  mechanical. 

New  York  Tribune,  December  19,  1913: 

It  is  to  be  borne  in  mind,  too,  that  governmental  service  in  some  other  countries  is  possible  up- 
on the  theory  exactly  the  reverse  to  ours.  Their  theorj'  is  that  the  Government  should  be  compre- 
hensively paternal  and  so  should  do  as  much  as  possible.  The  American  principle  is,  everything 
should  be  left  to  private  initiative,  which  the  general  welfare  does  not  require  to  be  done  by  the 
Government  or  which  the  Government  cannot  do  very  much  better  than  private  individual  or  cor- 
poration. The  burden  of  proof  of  one  of  these  latter  conditions,  therefore,  rests  with  the  advocates 
of  the  change. 

Extract  from  an  editorial  in  the  Seattle,  Wash.,  Times,  September  23,  1913: 

That  the  acquisition  of  the  telegraphs  would  constitute  a  grave  issue  none  can  question.  The 
question  of  governing  the  union  employes  of  the  present  corporation,  much  as  it  is  to  the  fore  in 
present  discussions  of  the  subject,  would  be  one  of  the  smallest  items. 

There  is  no  real  comparison  between  the  situation  in  European  governments,  where  telegraphs 
are  publicly  administered,  and  those  that  would  be  developed  in  the  United  States. 

In  Europe,  they  are  under  national  control  as  a  war  measure  or  because  the  governments  need 
the  financial  returns  accruing  from  their  operation.    Neither  of  these  needs  is  present  in  the  republic. 

San  Francisco,  Cal.,  Post,  October  13,  1913: 

England,  on  the  other  hand,  is  thickly  settled ;  there  are  no  "dead  lines"  through  unprofitable 
territory  and  the  Government  has  not  been  required  to  make  extension  into  isolated  districts  to  be 
operated  at  a  constant  loss. 

From  "Public  Finance"  (1899,  Part  II,  Chapter  10,  Page  264),  by  W.  M.  Daniels,  formerly  of 
the  Department  of  Political  Economy,  Princeton  University,  and  recently  appointed  by  President  Wil- 
son member  of  the  Interstate  Commerce  Commission : 

If  we  are  to  make  use  of  analog)'  as  a  guide  in  such  matters,  the  experiment  which  deserves  our 
most  careful  study  is  the  English  experiment  with  the  telegraphs.  Here  was  a  nation  whose  industrial 
habits  were  most  nearly  like  our  own.  Here  was  an  industry  whose  acquisition  cost  far  less  than  the 
railroads,  and  whose  administration  was  immensely  simpler.  Moreover,  conservative  financial  opinion 
had  pronounced  in  favor  of  the  experiment.  So  careful  a  student  as  Jevons  had  concluded  that  state 
telegraphs  would  be  successful  largely  for  the  same  reasons  which  had  made  the  state  management  of 
the  post  successful.  It  was  found,  however,  that  the  economics  secured  by  unity  of  management  were 
offset  by  the  higher  salaries  paid  to  employes,  and  that  the  government  had  to  obtain  a  monopoly  for 
the  state  telegraph,  though  formerly  such  an  intention  had  been  disclaimed.  The  financial  failure  of 
the  experiment  is  hardly  in  question.  A  successful  pressure  of  the  telegraph  personnel  for  higher 
pay,  and  an  invincible  demand  by  the  public  for  lower  rates,  proved  to  be  the  upper  and  nether  mill- 
stones between  which  the  financial  success  of  the  undertaking  was  ground  to  powder. 

18 


New  York  Times,  December  28,  1913 : 

Conceivably  the  service  which  might  suit  English  customers  would  not  serve  the  want  of  Amer- 
icans, but  the  fact  is  that  the  British  envy  us  what  the  Representative  (Mr.  Lewis)  describes  as  un- 
fit for  our  approval.  It  is  sure  that  no  American  will  envy  England's  telephone  service  as  described 
in  the  leading  British  Journal. 

According  to  the  London  Times  "the  history  of  the  telephone  in  the  United  Kingdom  has  been 
of  a  lamentable  tale  of  bureaucratic  blundering  tolerated  by  a  community  which  has  failed  to  conceive 
the  potential  method  of  communication,  and  to  insist  upon  its  effective  organization  on  a  business 
basis."  The  fact  which  shows  British  inappreciation  is  that  the  telephones  per  100  population  are 
1.4%  in  England  to  8.1%  in  the  United  States.  London  has  2.8%  per  100  and  New  York  has  more 
than  London,  Berlin,  Paris  combined,  although  London  alone  has  a  larger  population.  The  reason 
for  the  British  backwardness,  which  Mr.  Lewis  wishes  us  to  emulate,  was  the  British  ownership  of 
the  postal  telegraph.  *  *  * 

In  the  opinion  of  those  who  have  experience  of  the  British  system  "the  money  value  of  the 
time  and  temper  wasted  by  the  public  from  a  bad  service  is  a  far  more  serious  consideration  than  any 
reasonable  charges  imposed  for  a  good  one,  on  the  principle  that  speed  and  reliability  are  more  im- 
portant than  cheapness." 

Providence,  R.  I.,  Journal,  January  1,  1914: 

That  the  telephone  is  a  vexation  in  England,  is  shown  by  the  comparison  of  the  telephone  and 
the  mail;  17.7  is  the  percentage  of  telephone  messages  and  80.5  is  the  percentage  of  the  communica- 
tion sent  by  mail.  The  preference  for  the  niail  in  Great  Britain  thus  is  nearly  5  to  1.  In  the  United 
States  conditions  are  reversed:  The  mail  takes  less  than  41  per  cent,  of  the  messages,  while  more 
than  58  per  cent,  is  handled  by  the  telephone  companies. 

Philadelphia,  Pa.,  Public  Ledger,  December  22,  1913: 

The  London  Times  has  had  an  expert  review  the  situation  for  the  benefit  of  its  readers.  His 
conclusion  published  a  few  days  ago,  ought  to  be  interesting  on  this  side  of  the  ocean,  also. 
He  points  out  that  the  Government  decided  several  years  ago  to  take  over  all  telephone  lines  and  that 
the  private  company,  which  was  operating  under  a  terminable  franchise,  did  not  make  the  improve- 
ments in  its  plant  that  it  would  have  made  had  it  anticipated  retaining  control  of  its  business.  But  he 
says,  even  if  telephone  progress  had  not  been  retarded  by  the  impending  Government  control,  "the 
rapid  advance  that  is  a  vital  commercial  necessity  to  the  country  is  not  being  made  for  the  simple  rea- 
son that  a  Government  department  is,  to  judge  from  experience,  unable  to  carry  on  a  great  profit- 
making  commercial  concern  on  a  sound  business  basis."  During  both  periods,  therefore,  the  period 
of  private  control  and  since  the  Government  has  taken  over  the  private  lines,  he  concludes  that  the 
telephones  and  the  public  "have  suffered,  and  still  are  suffering  from  the  influence  of  government 
control." 

San  Francisco,  Cal.,  Chrotiicle,  December  31,  1913: 

In  many  countries  with  Government-owned  'phones,  the  system  is  a  joke.  Indeed,  it  is  a  mark 
of  social  distinction  to  have  a  "number."  As  for  the  telegraph,  it  is  closed  down  for  24  hours  every 
week  in  certain  government  ownership  countries  and  it  is  impossible  to  send  messages  after  9  o'clock 
at  night  or  before  8  o'clock  in  the  morning. 

Lowell,  Mass.,  Courier-Citizen,  December  24,  1913: 

Meantime  the  telephone  service  of  this  country  is  the  most  efficient  in  the  w^orld.  No  foreign 
service  that  Mr.  Lewis  can  find  so  much  as  approaches  it  either  in  extent  or  in  excellence.  Com- 
pared on  the  basis  of  the  number  of  available  exchanges  to  be  talked  with,  the  rate  in  the  United 
States  is  infinitely  lower  per  subscriber  than  it  is  in  any  other  country  on  the  foot-stool.  The  rate  is 
constantly  decreasing;  the  number  of  new  telephones  is  steadily  rising. 

19 


New  York  Evening  World,  December  22,  1913 : 

How  many  Americans  have  had  actual  experience  of  government  ownership  as  it  exists  in 
other  countries  ?  How  many  Americans  understand  how  foreign  are  most  of  its  results  to  our  habits 
of  personal  freedom  and  to  our  standards  of  efficiency? 

In  England  the  increasing  burden  of  the  government  telegraphs  upon  taxpayers  has  been  no- 
torious. Germany  makes  its  government  telegraph  system  a  handy  instrument  of  espionage.  France, 
although  a  republic,  does  much  the  same.  Government  in  both  these  countries  is  essentially  bureau- 
cratic. Wherever  even  a  degree  of  militarism  prevails,  government  ownership  is  bound  to  lend  itself 
to  spying  and  repression. 

Moreover,  any  American  who  has  ever  done  any  telephoning  in  France  does  not  need  to  be 
told  of  the  exasperating  inefficiency  and  slowness  of  the  French  system.     The  same  applies  to  Italy. 

Switzerland  hasn't  found  out  yet  whether  it  likes  goverimient  ownership  or  not.  The  system 
was  adopted  on  a  theory  of  unification  that  may  work  in  a  country  the  size  of  Switzerland.  Govern- 
ment ownership  for  less  than  four  million  people  is  a  different  thing  from  government  ownership  for 
one  hundred  million. 

Japan  took  over  its  railroads,  telephones  and  telegraph  to  provide  war  assets.  The  result  has 
been  in  every  way  bad.  The  Japanese  Government,  forced  by  military  burdens  to  economize,  has 
found  itself  unable  to  make  extensions.  Not  fifty  miles  of  new  road  have  been  built  since  govern- 
ment ownership  became  a  fact.  It  takes  six  months  to  get  a  telephone  installed,  and  the  less  said  about 
the  service  the  better. 

Americans  who  are  used  to  enterprise,  initiative,  rapid  improvement  and  wide  extension  in 
their  public  utilities,  to  say  nothing  of  personal  liberty  and  freedom  from  surveillance  in  their  conduct 
and  business,  will  find  government  ownership  as  it  works  in  other  countries  a  poor  argument  for  foist- 
ing it  upon  Uncle  Sam. 

Utica,  N.  Y.,  Herald-Dispatch,  December  20,  1913: 

If  Government  control  of  wire  systems  could  anywhere  be  made  a  success  from  a  financial 
standpoint,  it  would  be  in  Great  Britain,  where  political  influence  is  reduced  to  a  minimum  in  the  op- 
eration of  public  utilities.  Yet  the  British  Government  has  notoriously  failed  to  make  either  the  tele- 
graph or  telephone  branch  of  the  Post  Office  service  self-sustaining.  It  is,  therefore,  reasonable  to 
suppose  that  with  the  vastly  greater  temptation  which  the  numerous  wire  systems  of  this  country 
would  offer  to  intriguing  politicians,  the  ventures  of  government  operation  would  be  a  disastrous 
failure. 

New  York  Evening  Sun,  December  19,  1913: 

But  there  can  be  little  doubt  that  if  a  referendum  were  taken  among  the  people  who  have  had 
a  chance  to  try  Government-owned  systems  of  Europe  and  the  privately-owned  systems  of  the  United 
States,  the  Government  ownership  proposal  in  this  country  would  be  snowed  under. 

Boston,  Mass.,  Advertiser,  December  11,  1913: 

Where  Mr.  Burleson  could  find  such  example  is  difficult  to  imagine.  Surely  not  in  England 
where  the  Christmas  mail  was  recently  threatened  by  a  strike  of  Government  employes.  It  was  only 
the  announced  determination  on  the  part  of  the  British  authority  to  call  out  the  troops  and  use  them 
in  the  interest  of  the  Post  Office,  which  prevented  the  strike  from  being  called.  Should  Mr.  Burle- 
son turn  to  France  for  his  illustration,  he  would  have  to  explain  away  the  terrible  strike  which  tied 
up  French  railroads  some  years  ago. 

Had  not  the  Premier  called  the  military  reserve  and  set  them  to  the  task  of  running  the  rail- 
roads, France  would  have  nearly  starved  in  a  very  short  time. 

Mr.  Burleson  ought  to  know  that  in  Canada  there  are  several  Government-owned  railroads 
which  are  in  a  plight  to  which  the  present  condition  of  the  B.  &  M.  is  as  nothing. 

Brooklyn,  N.  Y.,  Eagle.  December  18,  1913: 

Over  his  Government  telegraph  lines  an  Englishman  may  send  a  telegram  for  6  pence,  but  at 

20 


the  end  of  the  year  the  taxpayers,  as  a  whole,  must  make  up  the  heavy  deficit  due  to  a  combination  of 
low  rates  with  the  expensive  management  which  government  operation  of  public  utilities  everywhere 
entails.  Mr.  Burleson  is  not  fortunate  in  citing  the  British  system  as  an  argmuent  in  favor  of  his 
policy,  and  there  is  also  a  Government  telephone  service  in  Great  Britain,  and  it  is  notoriously  among 
the  worst  in  the  world. 

Brooklyn,  N.  Y.,  Times,  December  18,  1913: 

But  the  main  objection  to  the  proposal  arises  from  the  fact  that  a  distinct  deterioration  in 
service  would  be  the  inevitable  result  of  the  acquisition  by  the  Government  of  these  great  public  utili- 
ties. As  President  Vail  of  the  Telephone  Company  well  points  out,  there  are  more  telephones  in  New 
York  City  than  in  the  entire  United  Kingdom  where  the  Government  operates  the  system.  In  for- 
eign countries  the  telephone  is  not  a  necessity.  Indeed,  it  is  in  a  sense  a  luxury.  With  us  it  is  as 
necessary  as  the  trolley  car  or  the  restaurant. 

Chicago,  111.,  Manufacturers'  News,  December  IS,  1913: 

Since  England  took  over  the  telegraph  lines,  it  has  been  confronted  with  an  annual  deficit  of 
approximately  $6,000,000.  This  does  not  prevent  the  telegraph  employes  from  asking  for  a  15%  ad- 
vance in  wages. 

The  English  ministry  is  opposed  to  further  advance  in  the  postal  and  telegraph  employes'  wages 
for  reasons  that  their  wages  and  pension  allowance  have  been  twice  advanced  during  the  last  six  years. 
The  public  also  resents  the  demand  made  at  the  holiday  season. 

The  present  ministry  is  having  an  exceedingly  hard  fight  to  give  the  Government  employes  and 
working  men,  in  general,  everything  they  asked  for,  including  old  age  pension,  insurance  and  higher 
wages  without  running  the  country  so  badly  into  debt  that  it  will  never  get  out  of  it. 

New  Haven,  Conn.,  Register,  December  13,  1913: 

Fortunately  government  ownership  of  telephones,  either  national,  state  or  municipal  has  been 
tried  out  in  a  good  many  parts  of  the  world.  While  it  seems  in  some  instances  to  be  working  fairly 
well,  its  failure  has  been  so  marked  in  many  well  observed  cases  as  to  lead  to  the  suspicion  that  it 
really  is  a  failure  everj-where.  For  even  the  fact  of  a  good  service  would  not  alone  serve  to  commend 
it.  We  need  to  know  that  it  promotes  economy  in  the  use  of  the  peoples'  money,  and  conscientious 
accounting  for  the  great  capital  entrusted.    This  has  not  been  the  showing. 

Lawrence,  Kansas,  Gazette,  December  4,  1913: 

Government  ownership  does  not  seem  to  help  things  along  to  any  great  extent.  In  England, 
where  the  Government  owns  the  telegraph  as  well  as  the  postal  lines,  there  is  a  strike  coming  on 
that  threatens  to  trouble  the  Kingdom  grievously.  The  government  employes  want  an  advance  in 
wages ;  the  Government  refuses  to  grant  it ;  the  employes  have  ordered  a  Christmas  strike,  and  have 
begun  the  trouble  by  destroying  records,  smashing  typewriters,  short-circuiting  the  wires  and  play- 
ing other  little  jokes  of  the  kind. 

Erie,  Pa.,  Dispatch,  December  8,  1913: 

That  strike  in  Great  Britain  of  the  Government's  postal  and  telegraph  employes,  100,000  of 
them,  was  averted  just  in  time.  It  would  have  been  a  particularly  nasty  time  for  such  a  strike. 
That,  by  the  way,  is  one  of  the  pleasant  possibilities  of  Government  ownership.  The  only  difference 
would  be  that  in  this  country  the  number  would  be  so  much  greater  and  the  cliances  proportionately 
SO. 

Chicago,  111.,  Inter-Ocean,  October  7,  1913: 

It  may  be  expefhent  to  take  over  or  destroy  the  present  telephone  and  telegraph  companies: 
The  Inter-Ocean  is  among  those  who  believe  it  is  not  expedient.  In  other  countries  "Government- 
ownership"  has  made  lower  efficiency  and  high  costs. 

21 


Some  years  ago  it  was  figured,  nor  was  the  accuracy  of  it  denied,  that  British  government 
ownership  of  the  telegraph  had  loaded  upon  the  taxpayers  a  loss  of  $175,000,000,  increasing  at  the 
rate  of  $5,000,000  a  year. 

Boston,  Mass.,  Truth,  November  22,  1913 : 

Public  ownership  of  railroads,  telephone  and  telegraph  would  mean  socialism;  and  if  anyone 
wants  to  know  what  that  means  let  him  spend  a  few  months  in  New  Zealand,  as  Mr.  Geo.  W.  Moore, 
of  Brookline,  Mass.,  recently  did,  getting  first  hand  information  in  the  Socialist  hot-bed  of  the  world. 

"The  country,"  said  Mr.  Moore,  "is  run  by  labor  leaders  for  the  benefit  of  labor  leaders  and 
is  practically  bankrupt.  English  capitalists  have  furnished  the  money  to  keep  the  Government  going 
so  far,  but  further  loans  have  recently  been  refused. 

♦  ♦♦********♦ 
"Practically  the  only  right  enjoyed  by  the  alleged  freeman  is  the  right  to  be  poor  and  abstain 

from  work." 

*  *  »  *  »  *  *  **  *  *  * 

"Graft,  inefficiency,  laziness,  indifference,  poverty  and  vice  seem  to  be  the  principal  products 
of  the  system,  and  in  the  production  of  these  it  is  all  that  can  be  desired  of  the  vicious  opponent  of 
modern  civilization." 

Lawrence,  Mass.,  American,  November  14,  1913: 

Mr.  Samuel  found,  to  be  sure,  as  we  all  know  it  is  true,  that  on  this  side  of  the  Atlantic  long 
distance  calls  do  not  always  get  through,  that  there  are  exasperating  delays  and  that  wrong  numbers 
are  sometimes  given  here  as  well  as  in  England.  But  more  important  to  know  is  his  remark  that 
in  his  official  opinion  the  British  Government  telephone  will  some  time  become  as  efficient  as  he 
found  the  American  private  system.  That  means,  of  course,  that  if  we  make  telephonic  communica- 
tion a  government  service,  it  is  more  likely  to  deteriorate  than  improve ;  for  the  British  Post  Office  is 
so  efficient  that  it  would  be  folly  to  expect  that  American  Government  telephone  would  be  as  well 
administered  as  the  British. 

Leslie's  Weekly,  New  York,  November  6,  1913: 

Governmental  telegraph  ownership  is  not  an  open  question,  however.  Great  Britain  has  en- 
joyed government  ownership  and  operation  of  telegraph  lines  for  the  past  forty  years,  and  in  that 
time  its  Post  Office  telegraph  monopoly  has  produced  a  total  deficiency  of  $87,000,000.  At  present 
taxpayers  of  Great  Britain  are  paying  at  the  rate  of  $4,200,000  annually  to  enjoy  the  luxury  of  gov- 
ernmentally  operated  telegraph  lines.  The  principal  reason  for  this  is  uncommercial  and  extravagant 
management  due  to  political  control. 

New  York  Commercial,  October  31,  1913: 

The  British  taxpayer  and  telephone  user  is  growing  highly  indignant  over  the  delay  in  revi- 
sion of  telephone  rates.  He  knows  that  the  present  telephone  rates  are  a  burden  and  a  cause  of 
confusion,  and  he  evidently  believes  that  the  telephone  business  has  been  in  the  hands  of  the  Post 
Office  Department  long  enough  to  give  its  officials  a  chance  to  plan  a  permanent  system  and  rate  of 
charges  for  the  use  of  the  telephone. 

The  Liverpool  Daily  Post,  a  staunch  government  organ,  has  recently  devoted  considerable  space 
to  the  scandalous  break-down  in  the  telephone  service  in  that  city  and  to  the  utter  inefficiency  of  the 
postal  authorities  when  handling  this  branch  of  their  work.  The  telephone  business  is  in  its  infancy 
in  England  and  its  growth  has  been  completely  stunted  since  the  government  got  hold  of  it.  With 
the  post  office  in  charge  of  the  telephone  service  in  Liverpool  the  suburban  post  offices  in  that  city 
close  very  early  in  the  evening  and  the  telephone  switchboard  closes  with  the  rest  of  the  post  office. 
The  result  is  that  telephone  service  is  practically  suspended  through  the  residence  districts  and  a 
large  part  of  the  business  section  of  a  city  that  is  the  third  port  in  the  world,  and  from  eight 
o'clock  in  the  evening  until  seven  o'clock  in  the  morning  two-thirds  of  the  subscribers  to  the  telephone 
service  find  their  communication  completely  cut  off. 

22 


Boston,  Mass.,  Co>nmercial  Bulletin,  October  11,  1913: 

According  to  the  London  Times,  Parliament  was  induced  to  transfer  the  telegraph  lines  to  the 
State  in  1871,  in  the  belief  that  the  monopoly  would  be  a  lucrative  one  for  the  country.  To  what 
extent  this  expectation  has  been  borne  out  is  disclosed  by  the  statement  that  the  forty  years  of  Gov- 
ernment monopoly  of  the  telegraph  have  produced  a  loss  of  more  than  $87,000,000. 


That  the  Government  has  not  made  a  commercial  success  of  the  telegraph  is  due,  says  the 
Times,  to  extravagant  management  and  political  control.  Traffic  has  shown  a  steady  increase  and 
innumerable  improvements  have  been  made  in  equipment  and  methods  of  working,  yet  it  costs  the 
Post  Office  appreciably  more  to  handle  a  fifteen- word  message  of  to-day  than  it  cost  to  handle  a 
thirty-word  message  of  twenty-five  years  ago. 

St.  Paul,  Minn.,  Dispatch,  October  9,  1913 : 

England  went  into  the  experiment  with  the  telegraph,  found  the  estimate  cost  quadrupled,  and 
after  doubling  the  Government  investment  encountered  an  annual  deficit  of  over  $5,000,000,  and  now 
coldly  proposes  to  deteriorate  the  service  and  increase  the  rates  to  balance  the  books.  With  our  rap- 
idly increasing  efficiency  of  service  and  cheapening  of  cost,  what  would  America  think  of  a  proposal 
like  that  ? 

Minneapolis,  Minn.,  Tribune,  October  8,  1913 : 

France  has  one  telephone  for  each  group  of  171  inhabitants.  We  have  a  telephone  for  each 
group  of  12.  Our  service  is  so  superior  to  that  of  the  French  that  their  journals  are  now  calling  for 
improvements  in  the  direction  of  the  "American  standard." 

England  has  had  an  extremely  unhappy  experience  with  her  state-owned  telegraph  system. 
She  paid  four  times  the  estimated  cost  to  obtain  it ;  and  she  has  since  doubled  her  capital  expendi- 
ture. The  investment  has  never  earned  interest;  it  has  failed  to  pay  operating  expenses.  The  New 
York  Times  gives  the  commercial  loss  of  the  transaction  at  "$175,000,000  some  years  ago,"  and  states 
"that  the  current  loss  is  $5,000,000  annually." 

Germany  owns  both  telegraph  and  telephone.  Her  Government  managers  have  estimated  the 
annual  depreciation  of  the  plant  at  45,000,000  marks.  A  sinking  fund  has  been  maintained  several 
years  at  that  rate.  The  maintenance  has  lately  required  so  large  an  increase  that  this  allotment  has 
been  reduced  to  25,000,000  marks. 

Seattle,  Wash.,  Times,  September  23,  1913: 

In  Europe  they  are  under  national  control  as  a  war  measure  because  the  Governments  need  the 
financial  returns  accruing  from  their  operation.     Neither  of  these  things  is  present  in  the  republic. 

The  experiments  along  these  lines  previously  have  not  been  distinguished  by  their  success. 
The  Government  cable  to  Alaska  is  a  case  in  point.  Seattle  residents  have  had  a  bitter  experience 
with  the  high  rates  imposed  on  communication  with  the  territory. 


ARBITRARY    AND    IRRESPONSIBLE   ADMINISTRATION 

{Foreign — Official) 

British  Parliamentary  Debates,  Official  Report,  April  24,  1913,  p.  632: 

Mr.  Alan  Sykes:    *    *    *    With  regard  to  the  question  of  the  telephone  service    *    *    ♦    I 
may  mention  a  case    *    *    *    which  also  happened  to  an  hon.  Member  on  this  side,  and  the  hon. 

23 


Member  happens  to  be  myself.  My  telephone,  which  is  often  out  of  order,  was  out  of  order  on  a 
certain  occasion,  and  I  sent  a  message  to  the  officials.  Nothing  was  done,  and  it  was  still  out  of 
order  the  next  day.  I  sent  another  message  the  next  day,  but  nothing  was  done.  I  did  not  send  a 
message  the  next  day,  but  I  sent  one  the  day  after.  Still  nothing  was  done.  I  then  took  advantage 
of  the  fact  of  being  a  Member  of  the  House  of  Commons,  and  addressed  a  personal  letter  to  the  Post- 
master-General and  put  the  position  before  him,  and  with  his  usual  courtesy  he  took  it  up,  and  the 
question  was  inquired  into.  The  reply  he  sent  me  was  to  the  effect  that  no  record  had  been  made 
of  the  first  complaint,  that  an  operator  had  received  the  second  complaint  and  had  considered  that 
the  machine  was  all  right,  and  had  not  reported  it  to  the  engineer,  and  that  the  engineer  had  exam- 
ined the  third  complaint  and  could  not  find  anj'thing  wrong,  and  it  was  only  when  I  communicated 
with  the  right  hon.  Gentleman  and  the  engineer  made  another  examination  that  it  was  found  that 
there  was  something  omitted  and  that  the  telephone  was  not  in  proper  order.  If  I  had  not  had  an 
opportunity  of  communicating  with  the  right  hon.  Gentleman  the  telephone  would  in  all  probability 
still  be  out  of  order,  and  I  should  probably  have  done  what  a  good  many  others  do  who  use  the  tele- 
phone, got  tired  of  making  complaints  and  perhaps  thrown  up  my  telephone. 

Truth,  London,  England,  December  11,  1912: 

His  Honour  Judge  Gye  made  some  very  strong  comments  last  week  at  the  Portsmouth  County 
Court  upon  the  iniquity  of  telephone  contracts.  He  had  to  determine  a  claim  by  the  Postmaster- 
General  for  telephone  rent.  The  subscriber  had  given  notice  of  discontinuance.  The  Post  Office 
authorities  cut  off  communication,  but  left  the  instrument  and  then  sued  for  the  rent.  This  under 
the  contract  they  are  empowered  to  do.  Judge  Gye  remarked  that  it  was  "a  shockingly  immoral  con- 
tract," and  he  said  so  "advisedly  and  intentionally."  He  had  no  option  but  to  decide  for  the  plaintiff, 
for  the  case  was  governed  by  a  decision  in  the  High  Court,  though  he  was  convinced  that  an  injus- 
tice would  be  done  the  defendant.  He,  however,  marked  his  opinion  by  making  an  order  for  pay- 
ment of  the  amount  claimed  at  the  rate  of  6d.  a  month.  His  Honour's  condemnation  of  the  contract 
is  not  a  whit  too  strong,  and  I  trust  his  remarks  will  be  brought  to  Mr.  Herbert  Samuel's  notice. 
Anyone  who  has  read  the  contract  through  knows  that  it  is  inequitable,  and  places  the  subscriber 
absolutely  at  the  mercy  of  the  department. 

British  Parliamentary  Debates,  Official  Report,  May  20,  1912: 

Mr.  Godfkey  Collins:  I  desire  to  draw  the  attention  of  the  Postmaster-General  to  three 
points  on  his  estimate.  The  first  is  the  misleading  profit  shown  by  the  Post  Office.  The  second  is 
the  large  and  growing  loss  on  the  telegraph  service ;  and  the  third  is  the  danger  that  the  telephone 
service  may  show  a  loss  to  the  public  in  future  years.  According  to  the  House  of  Commons  Paper 
No.  96,  the  profit  on  the  Post  Office  is  £5,153,000.  Naturally,  the  House  and  the  public  think  that  is 
the  true  profit ;  but  when  we  come  to  analyse  these  figures  more  closely,  we  find  that  the  Post  Office 
do  not  charge  themselves  with  the  cost  of  works  and  buildings,  amounting  to  £569,000,  nor  with  rates 
and  taxes,  amounting  to  £126,000,  nor  even  with  stationery  and  printing,  amounting  to  £196,000.  In 
other  words,  the  profit  is  a  fictitious  profit  to  the  extent  of  20  per  cent.,  and  the  figures  which  I 
have  mentioned  include  these  and  other  charges  amounting  to  £890,000.  So,  therefore,  the  profit 
made  was  positively  some  20  per  cent,  less  than  the  statement  issued  by  the  Postmaster-General  led 
us  to  anticipate. 

From  the  Report  of  the  Royal  Commission  .Appointed  to  Investigate  the  Postal,  Telegraph  and 
Telephone  Services  of  the  Commonwealth  of  Australia  (ordered  to  be  printed  October  5,  1910) : 

70.     The  Department  furnishes  annual  statements  showing  only  revenue  receipts 
Statemenia  ^'■°'"  '**  '^^^'^^  branches,  and  the  total  expenditure,  including  new  works,  for  all  branches 

"••'*"  of  the  service.     Such  statements  are  absolutely  useless  for  the  purpose  of  supplying  the 

requisite  information  to  determine  the  financial  position  of  its  several  branches. 

24 


{Foreign — Editorial) 

The  Times,  London,  England,  December  26,  1913: 

"Hope  Deferred"  sends  us  the  following  details  of  his  experiences  in  obtaining  the  telephone. 
Commenting  on  the  state  of  "hopeless  confusion"  they  indicate,  he  says: — "In  our  case  it  was  stated 
that  'special  steps'  were  being  taken.  The  result  of  these  "special  steps'  was  that  we  had  to  wait  for 
the  telephone  23  days  after  handing  in  the  agreement.  If  such  unwarrantable  delays  occur  with 
'special  steps,'  whatever  must  it  be  like  without  them?" 

November  5,  1913.— Applied  to  Vauxhall  Bridgeroad  Post  Office,  asking  what  to  do  to  obtain 
a  telephone.  They  directed  me  to  the  Westminster  District  Post  Office.  They  in  turn  directed  me  to 
the  Contracts  Office,  34,  Gerrard-street,  Soho,  to  whom  I  wrote  on  November  5. 

November  11.— Having  received  no  reply,  I  applied  to  a  third  post  office  and  was  given  a  third 
different  address — namely,  144a,  Queen  \'ictoria-street.  I  went  personally  here  and  found  what  I 
needed — the  telephone  agreement,  which  I   filled  in  and  signed  then,  November  11. 

November  14. — Wrote  to  the  Controller,  but  received  no  reply. 

November  17. — I  wrote  to  the  Secretary,  G.  P.  O.,  complaining  of  the  excessive  delay  and 
difficulty  in  getting  the  telephone.  This  resulted  in  a  printed  form  by  return  of  post  saying  that  the 
matter  should  receive  attention. 

November  19. — Still  dead  silence  from  the  Controller's  oflice,  so  T  wrote  again  reminding  them 
that  we  were  wanting  the  telephone  and  that  they  had  had  the  agreement  eight  days,  etc. 

November  20. — No  reply.    Wrote  again  to  the  Controller. 

November  21. — Received  a  letter  from  the  Controller  (dated  20th  inst.)  saying  that  the  mat- 
ter had  been  referred  to  the  sectional  engineer  and  that  the  matter  would  receive  "prompt  and 
adequate  attention,"  etc.  I  spoke  to  the  sectional  engineer  by  telephone,  and  he  knew  nothing  about 
us,  but  promised  to  send  a  man  round  to-morrow  (22nd). 

November  22. — Again  spoke  to  the  sectional  engineer  by  telephone.  He  denied  his  promise 
of  yesterday ;  said  that  they  were  busy,  that  they  were  making  special  efforts  in  our  case,  and  that 
we  should  have  to  wait. 

November  24. — Practically  all  my  letters  to  the  Controller  are  com])letely  ignored ;  wrote  to 
him  once  again  to  remind  him  about  our  telephone. 

November  25. — Received  a  letter  from  the  Controller  dated  22nd,  and  altered  in  pencil  to 
the  24th,  acknowledging  my  letters  of  the  19th  and  20tli  inst.,  and  saying,  inter  alia,  "special  steps  are 
being  taken  to  complete  the  circuit  at  an  early  date."  It  is  interesting  to  observe  that  it  took  two  days 
to  post  this  letter.  Another  letter  about  the  entry  in  the  Telephone  Directory  dated  22nd,  and  altered 
in  pencil  to  the  25th.  shoW'S  a  period  of  three  days  between  writing  and  posting. 

November  27. — I  received  two  different  letters  of  the  26th  inst.  from  the  Controller  giving  our 
"probable"  telephone  number.  One  of  these  letters  also  states  "the  completion  of  the  installation  is 
receiving  special  attention." 

On  November  28  and  29  the  instruments  were  put  up  in  our  offices,  and  it  had  been  promised  by 
the  sectional  engineer,  by  telephone,  two  or  three  times,  that  the  installation  should  be  completed  by 
the  29th  at  the  very  latest  without  fail. 

December  1. — I  telephoned  to  the  sectional  engineer,  and  he  said,  "Oh,  isn't  your  telephone 
completed  yet?"  lie  advised  me  to  ring  up  the  Controller's  office,  which  brought  forth  the  usual 
promises,  but  no  result. 

December  2. — Wrote  a  formal  letter  of  complaint  to  the  Secretary,  G.  P.  O.  Communicating 
with  the  sectional  engineer  by  telephone,  I  was  now  informed  that  there  was  some  more  outside  work 
to  be  done,  but  that  we  should  have  the  telephone  in  a  few  days. 

December  4. — The  telephone  was  actually  completed,  and  we  were  able  to  use  it  from  about 
4  p.  m.,  23  days  after  the  handing  in  of  the  agreement. 

Leicester,  England,  Mail,  December  23,  1912: 

In  reference  to  the  State  acquisition  of  the  telephones,  with  which  we  dealt  in  a  leading  article 
last  week,  a  local  correspondent  calls  our  attention  to  the  onerous  and  one-sided  conditions  which  the 

25 


Postmaster-General  has  inserted  in  the  form  of  contract  which  subscribers  have  now  to  sign.  He 
objects  particularly  to  the  seventh  and  ninth  paragraphs  of  the  "general  conditions"  under  which  the 
Postmaster-General  can  break  the  contract  without  penalty  or  responsibility  while,  if  the  subscriber 
is  guilty  of  the  slightest  lapse  in  any  matter  whatever,  he  is  liable  to  a  fine  in  the  form  of  "liquidated 
damages"  where  no  damage  is  done.  Under  the  tenth  paragraph  enormous  powers  of  inspection  are 
given,  not  only  to  the  subscribers'  premises,  but  "all  other  premises  under  the  subscribers'  control," 
while  another  paragraph  provides  that  the  certificate  of  any  subordinate  official  of  the  Post  Office  shall 
be  "conclusive  evidence"  of  the  matters  certified.  Our  correspondent  wrote  to  the  Postmaster-General 
pointing  out  clause  by  clause  the  objectionable  points  in  this  agreement,  only  to  be  told  that  it  had  been 
drawn  up  by  a  solicitor  and  could  not  be  modified.  "Those  who  think,"  adds  our  correspondent,  "that 
the  State  ever  can  run  a  business  at  its  best,  speak  without  knowledge." 

The  Times,  London,  England,  December  19,  1913: 

Charles  Straker  and  Sons  (Limited),  Bishopgate-avenue,  who  were  sued  in  the  City  of  London 
Court,  yesterday,  by  the  Postmaster-General,  for  18s.  9d.,  balance  due  for  telephone  calls,  complained 
that  they  had  been  charged  for  30  times  as  many  calls  as  they  had  had  and  said  they  defended  the 
case  in  order  to  make  a  public  protest. 

Mr.  Registrar  Wild,  in  giving  judgment  for  the  Postmaster-General  with  costs,  told  the 
defendants  that  there  was  no  remedy,  no  matter  how  much  they  were  overcharged,  as  they  had  signed 
an  agreement  admitting  that  the  Postmaster-General's  books  were  unquestionable,  however  inaccurate 
they  might  be.  The  defendants  must  go  to  Parliament  and  get  the  agreements  altered.  They  could 
not  do  without  the  telephone,  and  yet  they  could  not  get  it  without  signing  an  agreement  under  which 
they  had  no  voice  in  the  question  of  the  number  of  calls. 

Troy,  N.  Y.,  Record,  October  6,  1913: 

Prince  Charles  Wreed,  captain  of  a  cavalry  in  the  German  army,  has  been  fined  $7  because 
poor  telephone  service  caused  him  to  tell  the  girl  operator  that  he  considered  iier  office  a  hog  pen. 
The  Prince's  offense  comes  under  the  head  known  as  beamtenbeleidigimg.  Being  a  Government 
employe,  the  girl  could  insist  that  her  service  should  be  respected.  In  extenuation  of  his  act  the 
officer  said  that  the  service  was  really  almost  worthless.  While  the  prosecution  acknowledged  this  con- 
dition, the  fact  that  he  had  been  discourteous  could  not  be  overlooked.  Fortunately  for  many  of  our 
people,  they  are  not  using  the  telephone  service  which  is  under  Government  direction. 

Rochester,  N.  Y.,  Post-Express,  October  6,1913: 

Complaint  against  the  wretched  telephone  system  of  one  of  the  Government  exchanges  in  a 
European  city  brought  out  the  official  threat  that  if  the  expression  of  dissatisfaction  did  not  cease,  the 
telephone  service  in  the  city  would  be  discontinued  for  one  year. 

There  is  talk  of  the  nationalization  of  .American  telephones  and  telegraphs. 

The  Daily  Mail,  London,  England,  September  16,  1912: 

The  Englishman's  home  is  supposed  to  be  his  castle.  Alas!  it  is  nothing  of  the  kind.  Every 
person  who  signs  a  telephone  contract  opens  his  gate  to  the  wooden  horse,  and  from  that  moment 
the  particular  Briton  becomes  the  veriest  slave,  helpless,  without  redress,  and  minus  the  most  ele- 
mentary rights,  save  the  right  to  pay  and  overpay — in  advance.  The  amazing  thing  is  that  the  Briton 
does  it,  but  he  does. 

The  Daily  Mail,  London,  England,  Februan,-  6,  1912: 

Most  serious  of  all  the  com])laints  against  the  telephone  service  is  the  financial  loss  entailed  by 
wrong  calls. 

Correspondents  protest  against  their  helplessness  in  tiie  matter.  They  have  no  remedy  in  check- 
ing the  calls  debited  against  them.  They  must  pay  for  whatever  number  of  calls  the  authorities  state 
is  registered  against  them.  Argument,  the  subscriber's  own  record  of  his  calls  are  of  no  avail.  If 
he  does  not  pay  the  official  reckoning,  his  telephonic  connection  is  peremptorily  severed. 

26 


(American — Official) 

Congressional  Record,  January  15,  1914: 

Mr.  Calx)Er:  *  *  *  _\n  employe  of  a  railroad  or  any  other  corporation  or  employer  can 
bring  suit  in  a  civil  court  for  damages  for  injuries  received,  and  can  recover  an  amount  assessed  by 
a  jury.  An  employe  of  the  Government  is  estopped  from  bringing  any  such  action,  no  matter  what 
the  cause  of  his  injuries  may  be.  and  he  has  no  redress  whatever. 

From  official  statement  issued  by  Postmaster-General  Burleson,  for  publication  in  morning  news- 
papers of  May  30,  1913: 

*  *  *  Notwithstanding  the  great  zeal  displayed  in  the  effort  to  place  the  Department  on  the 
so-called  paying  basis  and  the  resultant  injuries  to  the  service,  the  claim  of  the  former  Postmaster- 
General  that  the  service  actually  yielded  a  profit  in  1911  has  no  foundation  in  fact.     *     *     * 

It  is  to  be  further  noticed  that  the  balance-sheet  as  heretofore  prepared  concerned  itself  en- 
tirely with  the  revenues  from  postage  and  the  operations  of  the  Department  and  expenditures  under 
the  appropriation  for  the  service  of  the  Post  Office  Department.  In  addition  to  this,  the  Department 
should  be  able  to  make  a  complete  statement  of  its  financial  status,  which  should  include  the  admin- 
istrative expenses  of  the  Department,  the  expenses  of  the  Auditor's  office,  and  a  fair  charge  for  the 
maintenance  of  Federal  buildings  used  exclusively  or  in  part  for  post-office  purposes  as  items  of  cost. 
It  has  not  been  the  custom  to  include  these  in  the  balance-sheet. 

From  the  Message  to  Congress  by  President  Taft,  January  17,  1912: 

Notwithstanding  that  voluminous  reports  are  compiled  annually  and  presented  to  the  Congress, 
no  satisfactory  statement  has  ever  been  published  of  the  financial  transactions  of  the  Government  as 
a  whole.  Provision  is  made  for  due  accountability  for  all  moneys  coming  into  the  hands  of  officers 
of  the  Government,  whether  as  collectors  of  revenue  or  disbursing  agents,  and  for  insuring  that 
authorizations  for  expenditures  as  made  by  law  shall  not  be  exceeded.  But  no  general  system  has 
ever  been  devised  for  reporting  and  presenting  information  regarding  the  character  of  the  expendi- 
tures made,  in  such  a  way  as  to  reveal  the  actual  costs  entailed  in  the  operation  of  individual  services  and 
in  the  performance  of  particular  undertakings;  nor  in  such  a  way  as  to  make  possible  the  exercise  of 
intelligent  judgment  regarding  the  discretion  displayed  in  making  expenditure  and  concerning  the 
value  of  the  results  obtained  when  contrasted  with  the  sacrifices  required. 

(American — Editorial) 

New  York  Sitn,  December  22,  1913: 

A  wise  and  virtuous  Congress  has  decreed  that  the  post-offices  over  which  Mr.  Burleson  presides 
shall  sternly  repress  the  habit  of  correspondence  on  Sundays,  and  every  conceivable  obstacle  is  cour- 
ageously interposed  between  the  man  who  wants  a  letter  and  the  object  of  his  desire.  Would  a  Gov- 
ernment telephone  be  conducted  on  the  same  high  principles  ? 

It  is  notorious  that  many  frivolous  conversations  are  carried  on  over  the  wires  on  the  first  day 
of  the  week.  Moreover,  these  conversations  are  frequently  for  the  promotion  of  plans  that  have  not 
the  approval  of  those  who  would  restore  the  New  England  observance  of  the  day  to  a  country  which 
has  somewhat  discarded  it.    Could  a  Government  telephone  system  countenance  such  trivialities? 

Certainly  not:  the  exchanges  would  shut  up  on  Saturday  nights  and  open  on  Monday. 

St.  Louis,  Mo.,  Times,  December  22,  1913: 

It  is  a  perfectly  simple  proposition  that  those  who  seek  to  govern  large  public  services  should 
be  amenable  to  the  law.  So  long  as  individuals  seek  to  perform  these  public  services,  there  are 
always  methods  of  redress  when  injustices  have  been  done.  If  these  methods  are  not  practicable  or 
if  they  are  not  applied,  the  fault  is  one  that  can  be  remedied. 

But  the  government  is  greater  than  the  law;  and  into  its  composition  there  go  large  numbers 
of  men  who  are  incompetent  and  others  who  are  dishonest. 

27 


Chicago,  111.,  Inter-Ocean,  May  27,  1913: 

In  connection  with  the  collapse  of  the  recreation  pier  at  Long  Beach,  Cal.,  on  Saturday,  by 
which  thirty-six  persons  were  killed  and  nearly  twice  as  many  seriously  injured,  there  are  circum- 
stances which  should  give  pause  to  some  eager  advocates  of  "public  ownership"  and  of  the  "more 
government"  proposition  generally. 

The  pier  belonged  to  and  was  erected  by  the  city  of  Long  Beach,  which  is  a  seaside  suburb  of 
Los  Angeles.  It  was  built  eight  years  ago,  and  is  stated  in  the  Associated  Press  dispatches  from  the 
scene  to  have  received  since  no  repairs  on  the  part  which  fell,  directly  in  front  of  the  "municipal 
auditorium"  which  was  a  part  of  the  structure. 

In  a  word,  public  ownership  did  not  secure  any  better  attention  to  the  safety  of  the  public  using 
the  pier  than  would  have  been  given  by  the  most  "greedy  and  reckless"  private  ownership.  In  fact,  it 
probably  secured  less  attention,  for  had  the  pier  been  a  private  enterprise  the  responsible  public 
officials  would  have  had  somebody  else  instead  of  just  themselves  to  inspect  and  regulate  and  keep  up 
to  the  mark,  demanded  by  considerations  of  public  safety. 

Saturday  Evening  Post,  December  14,  1912: 

There  is  hardly  a  state,  city  or  town  in  this  country  that  makes  an  intelligible  statement  of  its 
fiscal  operations  and  condition. 

Every  state,  city  and  town  publishes  once  a  year  a  thing  it  calls  a  treasurer's  report  or  an  audi- 
tor's report — usually  a  very  bulky  thing,  containing  an  interminable  maze  of  figures.  We  venture  to 
say  offhand  that,  as  to  about  two-thirds  of  these  reports,  the  best  expert  accountant  in  the  United 
States  could  not  construct  from  them  such  a  concise  and  intelligible  showing  of  income,  outgo,  indebt- 
edness and  cash  on  hand  as  the  New  York  Stock  Exchange  requires  from  every  corporation  whose 
securities  it  lists.  As  to  three-quarters  of  them,  we  venture  to  say  that,  if  any  such  confused,  occult 
statement  were  laid  before  the  directors  of  a  railroad,  those  directors  would  stand  up  in  righteous 
indignation  and  discharge  the  whole  accounting  department  on  the  instant. 

New  York  Times,  April  3,  1912: 

There  are  those  who  arc  urging  that  we  should  administer  the  telegraph  and  telephone  through 
the  government,  and  who  support  the  proposal  by  pointing  to  the  success  with  which  the  Post  Office 
is  administered.  This  current  year  the  Post  Office  reports  a  surplus  *  *  *  But  the  Post  Office  sur- 
plus disappears  if  it  is  charged  with  the  cost  of  the  buildings  in  which  it  transacts  its  business.  If 
it  were  to  be  charged  with  all  other  unitemized  costs,  it  might  appear  that  the  stamp  which  costs  2 
cents  at  the  Post  Office  window  really  cost  the  buyer  as  much  again.  It  is  sure  that  the  Post  Office 
itself  has  no  idea  what  it  costs  to  carry  a  letter  or  newspaper  either  one  mile  or  a  thousand  miles. 
In  other  words,  the  Post  Office  shows  a  profit  by  ignoring  the  burdens  carried  by  all  commercial  un- 
dertakings and  transacts  its  business  in  defiance  of  the  first  conditions  of  solvency  in  private  affairs 
and  contrary  to  the  principles  it  enacts  for  the  guidance  of  common  carriers.  To-day  the  franking 
privilege  burden  on  the  Government  rivals  the  former  pass  burden  on  the  railways.  Depreciation  is 
an  unknown  entry  in  Government  accounts.  Income  is  so  far  despised  that  it  is  proposed  to  operate 
the  Panama  Canal  without  tolls,  although  there  are  other  than  financial  reasons  to  the  contrary. 

From  "Principles  of  Economics"  (1911,  Vol.  II.,  Bk.  VII.,  Ch.  62),  by  F.  \V.  Taussig,  Pro- 
fessor of  Political  Economy  at  Harvard  University: 

*  ♦  »  Every  person  who  has  looked  into  the  accounts  of  a  railway  or  iron  works  or  large 
manufacturing  concern  knows  how  necessary  it  is  to  analyze  the  figures,  and,  above  all  the  state  of 
the  capital  account,  before  judging  whether  the  management  has  been  good.  To  supervise  public  offi- 
cials, and  to  judge  whether  their  administration  has  been  efficient,  becomes  the  more  difficult  as  plant 
is  larger  and  more  complex.  The  more  one  is  disposed  to  entertain  general  doubt  as  to  the  probable 
success  of  public  officials,  the  more  is  one  averse  to  intrusting  such  business  to  their  hands. 

28 


COMPARATIVE  EFFICIENCY 
(Official) 

Coiigrcssioiiiil  Record.  January   19,   1914,  page  1973: 

Mr.  McClmber:  *  *  *  2s'o  one  will  deny  that  we  can  not  expect  the  same  personal  interest, 
the  same  curtailment  of  expenses,  the  same  unfailing  watchfulness  when  the  Government  has  to  pay 
the  bills  as  when  we  must  pay  them  ourselves.  Government  ownership  of  railways,  telegraph  lines, 
and  other  public  utilities  means  bad  service,  extravagance,  and  a  menace  to  the  rights  of  all  the 
people. 

Extract  from  a  paper  by  R.  C.  Erskine  (Civil  Service  Commissioner,  Seattle,  Washington), 
read  at  the  First  Annual  Conference  of  the  League  of  Pacific  Northwest  Municipalities,  October  24 
and  25.  1912: 

The  other  day  I  asked  four  large  employers  in  Seattle  which  they  would  rather  hire  of  two 
men  of  equal  natural  capacity  and  training,  one  having  worked  for  a  city  and  the  other  for  a  private 
employer  for  the  five  years  since  leaving  school.  Three  of  these  employers  said  they  would  hire  the 
man  who  had  been  with  a  private  concern  and  the  fourth  said  that  while  private  employment  was 
more  apt  to  develop  a  good  worker  than  public,  it  was  the  policy  of  his  house  not  to  hold  a  man's  past 
business  experience  too  much  against  him  and  he  would  give  either  of  the  applicants  a  chance  to  make 
good. 

From  "The  U.  S.  Government's  Shame"  (1908),  by  Edwin  C.  Madilcn,  Third  Assistant  Post- 
master General  from  July  1st,  1899,  to  March  22nd,  1907,  pp.  25-26: 

The  average  time  of  Postmasters  General  is  less  than  two  years.  They  come  in  at  the  head  of 
a  service  of  which  they  know  practically  nothing  and  never  stay  long  enough  to  learn.  If  all  the  Post- 
masters General  for  the  past  twenty  years  could  be  taken  one  at  a  time  and  ciuestioned,  it  is  doubtful 
if  one  of  them  would  be  able  to  tell  offhand  the  rates  of  postage  on  mail  matter,  much  less  any  of  the 
vast  details  of  the  great  system. 

British  Parliamentary  Debates,  Oflicial  Report,  May  20,  1912,  pp.  1599-1600: 

Sir  G.  Doughty  :  *  *  *  I  listened  with  very  great  interest  to  the  right  hon.  (jcntleman's  state- 
ment respecting  the  telephone  service.  I  know  it  is  very  bad,  and  it  requires  very  great  changes  before 
it  might  be  called  decently  comparable  with  either  the  United  States  or  Canada.  *  *  *  In  the  United 
States  they  have  over  eight  million  telephones  in  constant  use,  and  they  can  do  it  on  the  very  best 
lines  owing  to  their  long  experience  and  their  method  of  working. 

British  Parliamentar)-  Debates,  Official  Report,  June  19,  1911,  p.  86: 

Mr.  Morton  :  *  *  *  I  am  sorry  to  hear  to-day  that  the  Americans  are  so  far  in  advance  of  us 
in  this  matter  of  the  telephone.  We  pride  ourselves,  I  suppose,  on  being  as  much  advanced  as  other 
people,  but  it  is  worth  while  bearing  in  mind,  now  we  are  told  that  the  Americans  are  a  long  way  in 
advance  of  us  in  their  telephone  service,  that  the  service  there  is  under  a  private  company  and  that 
they  are  obliged  to  look  after  their  customers  better  than  a  Government  Department. 

British  Parliamentary  Debates,  Official  Report,  June  19,  1911,  p.  52: 

Mr.  Herbert  Samuel  (Postmaster-General)  :  *  *  *  We  have  been  closely  watching  the  de- 
velopment of  the  telephone  system  in  the  United  States — the  country  which  was  its  original  home,  and 
where  it  has  reached  its  highest  development.  For  many  years  representatives  of  my  Department  have 
been  visiting  the  United  States  in  order  to  acquire  information  there.  The  head  of  the  telephone 
branch  of  the  Post  Office  has  been  to  the  United  States,  and  the  chief  engineer  has  also  made  an  ex- 
haustive study  of  the  telephone  system  there.  The  telephone  traffic  manager  has  only  just  returned. 
We  have  established  a  system  of  travelling  scholarships   for  Post-Office  engineers  which  will  enable 

29 


them  to  go  over  to  the  United  States  for  considerable  periods  in  order  to  make  a  minute  study  of  the 
telephone  in  that  country. 

From  the  Report  of  the  Royal  Commission  appointed  to  Investigate  the  Postal,  Telegraph  and 
Telephone  Services  of  the  Commonwealth  of  Australia  (ordered  to  be  printed  October  5,  1910)  : 

Disregard  of  ^^^-     *    *    *    So   far  35  coHstruction  materials  are  concerned,  the  Department 

metho^ds   '""'""'      has  been  working  in  a  most  primitive  manner,  exhibiting  an  utter  disregard  of  ordi- 
nary business  methods,  and  entailing  a  cumbersome  and  expensive  system  of  purchase. 

9.     Your  Commissioners,  during  their  inquiry  into  the  management  of  the  Post 
and  Telegraph  Department,  discovered  defects  which  were  due  to  lack  of  efficient 
management  as  distinct  from  the  system  of  control,  and  also  defects  which  were  in- 
man"gem?nt  hercut  in  the  system.     In  framing  this  Report  endeavors  have  been  made  to  broadly 

and  system.  Separate  the  defects  of  system  from  those  of  management.     It  is  evident  that  an  in- 

ferior system,  even  under  sound  management,  would  make  for  an  indifferent  service. 
When,  however,  an  inferior  system  is  associated  with  a  weak  and  limited  manage- 
ment, the  results  are  disastrous. 

Report  of  Select  Committee  on  Post  Ofiicc  Servants  (ordered  printed  by  House  of  Commons. 

July  24,  1907)  : 

Salaries  of  Sorting  Clerks  and  Telegraphists  {In  the  Provinces). 

Par.  254.  Representations  were  *  *  *  made  (to  the  Committee)  that  the  minimum  estab- 
lishod  wage  was    *    *    *    insufficient. 

Par.  256.  The  department  replied  that  in  their  opinion  the  rates  of  pay  and  the  avenues  of 
promotion  were  adequate.  *  *  *  "That  the  Government  was  obliged  to  tolerate,  owing  to  Parlia- 
mentary pressure,  a  degree  of  inefficiency  which  in  private  employment  would  lead  to  dismissal  of  the 
employee." 

(Editorial) 

The  Daily  Mail,  London,  England,  January  2,  1914: 

Why  is  it  that  Government  ownership  and  management  of  the  telephones  is  practically  always  a 
failure?  Why  is  it  that  for  every  thousand  Europeans  there  is  only  one  telephone,  while  for  every 
thousand  Americans  there  arc  fifteen?  Why  is  it  that  the  country  which  has  done  most  to  improve 
the  telephone,  both  technically  and  commercially,  and  to  popularise  its  use  is  the  country  in  which  its 
operation  and  development  have  been,  and  still  arc,  exclusively  the  work  of  private  enterprise?  Why 
is  it  that  not  one  of  the  innumerable  discoveries  that  have  transformed  the  telephone  industry  in  the 
last  thirty  years  has  emanated  from  a  Department  of  State,  that  European  Governments  have  been  the 
last  to  adopt  them,  and  that  the  verdict  which  experts  arc  obliged  to  pass  upon  them,  with,  perhaps, 
two  partial  exceptions,  is  that  they  have  not  learned  their  business?  Why  is  it  that  there  are  great  and 
famous  towns  in  Europe  at  this  moment  where  methods  and  machinery  that  were  abandoned  twenty 
years  ago  in  .Xmerica  arc  still  in  use?  Why  is  it  that  throughout  the  length  and  breadth  of  Great 
Britain  and  the  Continent  hardly  a  single  efficient  long-distance  service  is  to  be  found?  Why  is  it  that' 
in  New  York  one  can  invariably  get  the  number  one  wants,  and  get  it  at  once,  while  in  London  one 
has  often  to  wage  a  prolonged  and  embittering  battle  with  a  slow  operator,  insufficient  lines,  and  a  con- 
versation— if  any  conversation  ensues — that  is  only  audible  when  it  is  interrupted? 

The  broad  answer  to  all  these  questions  is  that  the  alertness  and  enterprise  that  are  essential  to 
telephone  development  cannot  be  expected  from  a  Government  Department.  The  characteristics  of 
the  bureaucratic  mind  and  temperament  forbid  it.  The  organization  of  a  Government  office,  with  a 
virtually  irremovable  staff,  forbids  it. 

30 


The  Daily  Mail,  London,  England,  December  27,  1913: 

Mr.  Samuel  has  recently  returned  from  a  visit  to  the  United  States  and  Canada.  The  contrast 
batween  the  telephone  service  he  encountered  there  and  the  parody  of  it  over  which  he  presides  at 
home  must  have  filled  him  with  mortification.  Nor  can  he  well  have  escaped  realising  that  the  es- 
sence of  a  telephone  system,  and  the  sole  test  by  which  its  value  can  be  judged,  is  its  efficiency ;  that 
it  is  either  efficient  or  it  is  nothing  but  an  exasperating  mockery ;  and  that  a  cheap  service  which  is 
also  unreliable  is  far  more  expensive  than  a  comparatively  dear  service  that  can  always  be  depended 
upon. 

The  Times,  London,  England,  December  3,  1913: 

On  the  other  hand,  the  fact  remains  that  in  .America  the  exchanges,  with  practically  the  same 
equipment  as  is  used  in  London,  are  able  to  give  their  subscribers  a  much  more  prompt  and  efficient 
service,  as  a  matter  of  practical  certainty.  The  shortcomings  of  operators  in  this  country  must  not, 
therefore,  be  attributed  entirely  to  the  arduous  and  harassing  nature  of  their  work. 

The  root-fault  appears  to  lie  in  the  system,  in  the  conduct  of  the  telephone  business  by  a  Gov- 
ernment Department  instead  of  by  private  enterprise. 

The  Times,  London,  England,  July  20,  1910: 

In  most  European  countries  the  need  for  rapid  electrical  cGninuini:ation  is  just  as  great  as  it 
is  in  America,  and  were  the  supply  as  efficiently  organized  as  it  is  in  America  there  would  be  almost 
as  great  a  demand  for  the  telephone  service  here  as  there.  The  fact  that  there  is  only  one  European 
telephone  to  ten  American  telephones  must  point  to  some  general  cause  of  slow  or  arrested  develop- 
ment. 

From  the  National  Telephone  Journal,  London,  England,  reprinted  in  the  Financial  Times. 
London,  England,  February  22,  1910: 

In  America,  on  the  one  hand,  the  telephone  service  is  rapidly  being  developed  to  its  utmost 
limits ;  in  Europe,  on  the  other  hand.  State-controlled,  the  telephone  system  is  either,  at  best,  moder- 
ately developed,  or  else  absolutely  starved.  There  is  no  doubt  that  in  a  well-organized  company  the 
freer  stimulus  given  to  individual  merit  and  capacity,  and  the  reaction  of  the  latter  both  on  the  quality 
and  earning  power  of  a  service,  benefits  a  far  wider  circle  than  the  shareholders — namely,  the  public 
at  large. 

New  York  Press,  February  15,  1910: 

U.  N.  Bethell,  vice-president  of  the  New  York  Telephone  Company,  has  received  a  letter  from 
M.  Millerand,  Minister  of  Posts  and  Telegraphs  in  France,  asking  if  the  New  York  Company  will 
take  on  six  young  telephone  officials  from  Paris  and  give  to  them  a  thorough  practical  training  in  the 
telephone  business  in  all  its  branches. 

Bulletin  des  Abonncs  an  Telephone  (Telephone  Subscribers'  Bulletin),  Paris,  France,  Febru- 
ary, 1909,  p.  3  (Translation)  : 

In  New  York  it  takes  13  seconds  and  a  half  to  obtain  a  local  conimuiiicalion.  In  Paris,  are  we 
assured  of  obtaining  a  local  connection  at  the  expiration  of  13  minutes? 

Telephone  Engineer,  Chicago,  111.,  December,  1913: 

Former  Postmaster-General  James,  a  very  high  authority,  has  never  favored  Government  own- 
ership of  the  telephone  and  telegraph  business.  He  has  gone  so  far  as  to  say  that  were  the  Post  Office 
department  managed  with  the  same  skill,  energy  and  business  capacity  that  characterizes  the  manage- 
ment of  our  great  corporation,  it  would  be  practicable  to  reduce  letter  postage  from  2  cents  to  1  cent 
and  still  leave  a  balance  in  favor  of  the  Government. 

There  is  not  a  particle  of  doubt  that  a  better  mail  service  than  we  now  have  could  be  had  under 
competent  private  management  at  a  cost  at  least  $50,000,000  a  year  less  than  the  people  are  now  pay- 

31 


ing.     Neither  our  Government  nor  any  other,  can  manage  the  telephone  and  telegraph  with  half  the 
economy  and  efficiency  of  private  ownership  and  direction. 

New  York  Press,  December  27,  1913: 

The  Government  will  owe  a  billion  dollars,  say,  but  for  all  practical  purposes  of  the  Govern- 
ment it  will  be  as  if  the  deficit  didn't  exist.  The  Government  will  have  to  pay  $40,000,000  a  year  in- 
terest, say,  but  for  all  practical  purposes  of  the  Government  it  will  be  just  as  if  it  wasn't  paying  any 
interest  at  all.  The  Government  will  have  to  pay  into  the  sinking  fund  several  more  millions  a  year, 
but  for  all  practical  purposes  of  the  Government  it  will  be  just  as  if  it  weren't  paying  in  a  cent. 

That  is  to  say,  this  will  all  be  so  if  the  Government  can  and  does  operate  the  wire  service  as 
efficiently  and  as  profitably  as  it  is  now  operated.  If  it  doesn't,  of  course,  that  will  be  a  horse  of  a 
different  color.     And  that  is  really  the  whole  question. 

Waterloo,  Iowa,  Reporter,  December  23,  1913: 

When  the  Government  owns  and  operates  the  railroads,  the  telegraphs  and  telephones,  rates 
will  be  much  higher  than  they  are  now  or  else  the  Government  will  become  bankrupt,  as  it  cannot  do 
any  business  as  cheaply  and  efficiently  as  it  would  be  done  under  private  management,  if  interest  on 
bonds  necessary  to  acquire  the  properties  is  taken  into  consideration. 

Philadelphia,  Pa.,  Inquirer,  December  22,   1913: 

Telephone  and  telegraph  companies  are  run  on  a  scientific  basis.  Expenses  are  watched  with 
great  care.  If  anything  goes  wrong  the  remedy  is  promptly  applied.  Could  the  official  red-tape  of 
the  Government  be  relied  upon  to  reduce  the  efficiency  of  the  private  corporation?  We  seriously 
doubt  it.  England  runs  its  telegraph  through  its  Post  Office  Department,  but  financially  it  is  a  great 
loss.  The  deficit  for  forty  years  has  averaged  more  than  $2,000,000  annually. '  The  present  deficit  is 
more  than  $3,000,000,  and  the  recently  acquired  telephone  service  is  another  expensive  experiment. 

Albany,  N.  Y.,  Journal,  December  20,  1913: 

Again  it  is  the  question  of  efficiency  of  service.  Would  efficiency  be  maintained  at  the  stand- 
ard established  by  the  private  corporations?  These  have  every  incentive  to  give  the  best  service  pos- 
sible. They  need  all  the  patronage  they  can  obtain,  since  they  are  in  business  for  private  interests. 
The  better  they  satisfy  their  patrons  the  more  I)usiness  they  are  likely  to  get.  And  they  know  that 
if  they  fail  in  any  inqwrtant  particular,  complaints  can  and  will  be  made  to  agencies  of  the  Govern- 
ment. 

New  York  Sun,  December  20,  1913: 

The  Telegrai)h  and  Telephone  companies  arc  among  the  best  administered  institutions  in  the 
world.  Their  systems  are  the  result  of  long  and  sharp  competition  and  the  enlightened  application  of 
the  best  science  and  the  most  expert  encrg)-  to  the  betterment  of  their  systems.  They  are  constantly 
meeting  new  demands  of  the  business  and  they  are  voluntarily  reducing  rates  wherever  business 
permits. 

The  Postal  service— but  perhaps  it  is  better  merely  to  say  that  for  years  to  come  there  will 
be  work  enough  for  the  Government  in  improving  the  machinery  in  its  present  field  of  operation, 
without  undertaking  the  preposterous  and  unnecessary  extension  of  functions  which  Mr.  Burleson's 
annu.tl  report  so  complacently  proposes.       This  is  the  plain  truth  of  tlic  matter. 

New  York  Press.  December  20,  1913: 

Whoever  knew  a  Government  building  to  be  constructed  as  quickly,  as  cheaply  and  as  success- 
fully as  a  corporation  or  an  individual  constructs  a  similar  building? 

Whoever  knew  a  Government  service  to  be  performed  with  the  dispatch  and  efficiency  a 
similar  service  is  |)i,'rformed  by  a  jirivate  enterprise? 

Whoever  knew  Government  employees  to  work  the  hours  that  other  men  work? 

Whoever  knew  Government  employees  to  put  into  their  work,  long  hours  or  short  hours,  the 
steam  that  other  men  put  into  theirs? 

32 


Whoever  knew  the  highest  talent  for  organization,  for  administration,  for  business  manage- 
ment, to  seek  Government  jobs? 

All  this  has  a  direct  and  vital  bearing  upon  the  proposal  of  men  close  to  the  administration  to 
put  the  United  States  Government  into  the  telephone  and  telegraph  business. 

Saginaw,  Mich.,  Courier-Herald,  December  19,  1913: 

Government  ownership  works  ven*-  well  in  countries  which  have  a  comparatively  stable  admin- 
istration, in  short  there  are  no  frequent  changes  of  officials  or  reversals  of  policy.  It  is  very  ques- 
tionable just  how  well  it  could  be  expected  to  work  in  a  country  like  our  own  in  which  there  is  likely 
to  be  a  complete  change  of  administration  and  an  entire  overturn  of  Governmental  theories  and  prac- 
tices ever)'  four  years.  A  business  cannot  be  most  successfully  conducted  which  is  likely  to  be  placed 
in  wholly  different  hands  at  short  intervals,  whose  governing  officials  are  likely  to  be  appointed  not 
for  efficiency,  but  for  political  considerations,  are  likely  to  have  had  no  experience  with  the  depart- 
ment in  which  they  are  placed,  and  may  fly  off  on  entirely  new  and  unexpected  tangents. 

Indianapolis,  Ind.,  Netvs,  December  18,   1913: 

We  know,  as  a  matter  of  fact,  that  Government  management  is  always  more  costly  than  pri- 
vate management — and  usually  far  less  efficient.  In  England  at  the  present  time  tliere  is  much  com- 
plaint of  bad  telegraph  service.     Even  our  own  postal  service  is  far  fron.  what  it  ought  to  be. 

The  Times,  London,  England,  December  1,  1913: 

There  is  no  doubt  that  the  superiority  of  the  American  system  has  been  attained  in  a  great 
measure  by  administrative  ability  in  its  organizers  and  the  wide  field  of  opportunity,  with  few  serious 
obstacles  of  competition,  in  which  they  have  worked.  Their  outlook  has  been  steadily  national,  not 
parochial.  They  have  realized  that  defective  telephonic  communication  is,  in  every  sense,  bad  busi- 
ness, and  that  the  factors  constituting  good  service,  in  the  order  of  their  importance,  are  (1)  speed 
and  accuracy  in  securing  connections ;  (2)  volume  and  clearness  of  sound  transmitted ;  and  (3)  cost. 
They  have  realized  that  the  money  value  of  the  time  and  temper  wasted  by  the  public  over  a  bad 
service  is  a  far  more  serious  consideration  than  any  reasonable  charges  imposed  for  a  good  one,  and 
they  have  therefore  proceeded  on  the  principle  that  speed  and  reliability  are  more  important  than 
cheapness. 

Telephone  Engineer,  Chicago,  111.,  November,  1913 : 

Thousands  who  are  responsible  for  good  telephone  service  to-day  have  studied  it  with  intense 
concentration  for  thirty  years.  We  would  respectfully  urge  that  all  politicians  who  contemplate  the 
advocacy  of  Government  ownership  devote  at  least  an  equal  period  of  time  to  its  investigation.  By 
that  time  either  the  political  efficiency  of  the  country  will  be  wonderfully  changed  or  they  will  have 
decided  that  the  thing  cannot  be  done. 

Boston,  Mass.,  Herald,  November  28,  1913 : 

Of  all  the  agencies  under  heavens  among  men  for  conducting  ordinary  business,  the  Govern- 
ment of  the  United  States  is  the  least  efficient.  Its  long  range  of  operations — for  Washington  is  a 
good  ways  off — its  log-rolling  by  Districts  and  States,  its  necessary  subordination  to  the  demands  of 
its  organized  employees,  its  redundant  pay-rolls,  all  spell  inefficiency.  The  general  public  pays  the 
price,  partly  for  the  service  at  the  time  it  is  performed  and  later  in  general  taxation.  This  is  the  way 
it  is  now  paying  for  the  Post  Office  and  for  the  parcel  post  and  for  everything  else. 

Government  ownership  once  secured,  would  mark  the  end  of  improvement  in  the  transmission 
of  intelligence  by  these  two  agencies.  Do  you  realize  how  private  enterprise  would  run  the  light- 
houses? By  an  automatic  arrangement,  just  as  the  electric  street  signs  arc  flashed  on  and  ofT  and 
without  the  need  of  individual  attendance  aside  from  supervisors.  Will  the  Government  ever  do  this? 
Never.     Its  aim  is  not  to  save  labor,  but  to  make  it.     Is  Congressman  Curley  studying  to  find  ways  of 

33 


reducing  the  pay-rolls  in  the  Charlestown  Navy  Yard?     If  he  were  would  he  remain  Congressman 
long?    *   *    * 

The  visitor  to  the  National  Capitol,  taken  into  the  Bureau  of  Engraving  and  Printing,  will  there 
be  shown  presses  turned  by  human  hands,  with  the  suave  explanation  of  the  Government-paid  atten- 
dant that  the  work  is  of  such  a  delicate  character  that  no  form  of  mechanical  power  can  be  safely  ap- 
plied. This  is  sheerest  humbug!  There  is  not  a  shred  of  engineering  testimony  to  that  effect.  If 
anything,  the  electric  power  of  the  present  day  is  superior  in  uniformity  and  responsiveness  to  any 
that  the  human  arm  can  supply.  This  is  only  one  of  the  countless  devices  for  making  work,  and 
openly  advocated  as  such  by  the  legislative  agent  who  forced  the  requirement  from  a  timid  Congress. 

Springfield,  Mass.,  New  England  Homestead,  October  18,  1913: 

It  took  twenty  years'  persistent  public  effort  to  induce  Congress  to  authorize  parcel  post.  How 
awful  it  would  be  if,  every  time  we  wanted  some  improvement  in  railways,  telephones  or  telegraphs, 
we  had  to  wait  for  Congress  to  grant  it. 

New  York  Times,  October  4,  1913: 

It  is  interesting  to  note  that  it  is  always  the  prosperous  private  undertakings  which  the  Gov- 
ernment covets  in  the  interest  of  the  people.  The  Government  never  pioneers  and  develops  and  pro- 
duces profit  where  none  was  before.  The  Government  specialty  is  spending  $2  in  the  place  of  $1, 
and  hiring  two  men  in  the  place  of  one.  It  is  true  that  Government  officials  sometimes  have  delu- 
sions of  grandeur  in  this  respect,  but  the  realization  of  the  dreams  are  subject  to  such  sad  awaken- 
ings as  overtook  the  British  Government's  dabbling  with  wireless  communications. 

The  Saturday  Evening  Post,  February  15,  1913: 

The  statement  that  Collector  Loeb,  of  the  port  of  New  York,  will  resign  promptly  on  March 
fourth  is  only  one  among  many  instances  which  remind  us  that  business  wants  able  men,  but  the  Gov- 
ernment does  not. 

We  understand  Mr.  Loeb  has  made  an  exceptionally  good  record  as  collector  of  the  port  of 
New  York.  If  he  had  made  an  exceptionally  good  record  for  the  Steel  Trust  or  a  railroad  or  bank 
the  employer  would  naturally  be  anxious  to  retain  his  services.  To  that  end  it  would  make  him  every 
reasonable  assurance  of  permanent  tenure,  higher  position  and  better  pay — without  inquiring  to  what 
political  party  or  church  he  belonged.  .As  an  employee  of  the  United  States  Government  he  might 
have  made  a  record  that  astonished  the  world,  but  the  employer  would  have  no  use  for  him  after 
March  fourth — no  inducement  of  permanent  tenure,  higher  position  and  better  pay  to  offer  him. 

Brooklyn,  N.  Y.,  Life,  February  8,  1913 : 

Professor  Pupin  of  Columbia  recently  took  exception  to  the  casual  remark  of  a  gentleman  who, 
being  asked  what  he  considered  the  three  greatest  institutions  in  the  world,  answered:  the  Roman 
Catholic  Church,  the  German  Army  and  the  Standard  Oil  Company.  Professor  Pupin  told  him  he 
was  right  only  as  to  the  last,  for  the  three  greatest  institutions  in  the  world  were  the  Standard  Oil 
Company,  the  General  Electric  Company  and  the  American  Telephone  and  Telegraph  Company. 
Whether  the  professor  was  right  or  wrong  these  institutions  testify  to  our  organizing  ability  and  if 
our  government  were  run  as  they  are,  Germany  would  be  taking  lessons  from  us  and  one  might  talk 
of  municipally  operated  subways  without  being  popularly  regarded  as  lacking  in  the  upper  story. 

From  an  article  entitled  "The  Government  and  the  Railroads,"  by  Arthur  T.  Hadley,  LL.D., 
President  of  Yale  University,  published  in  Youth's  Companion,  April  18,  1912: 

♦  ♦  ♦  An  employee  of  the  United  States  Government  feels  less  assured  of  the  permanence  of 
his  position  than  an  employee  of  most  of  our  private  corporations.  He  is  less  certain  that  efficient 
service  will  result  in  promotion,  and  far  more  apprehensive  of  outside  interference  with  his  work  by 
people  who  know  nothing  of  the  real  conditions  under  which  he  labors. 

34 


SERVICE 

( J-orctgu — Official) 

Extract  from  Minutes  of  Proceedings  of  a  Deputation  from  the  London  Chamber  of  Com- 
merce, which  waited  upon  Postmaster-General  Samuel,  July  4,  1913: 

*  *  *  Those  of  us  who  visit  America  are  quite  satisfied  that  the  trunk  (long  distance)  serv- 
ice in  this  country  is  not  in  anything  like  the  shape  of  the  trunk  service  in  the  United  States.  I  do 
not  think  anyone  who  visited  the  United  States  would  say  that  the  trunk  service  here  could  be  com- 
pared with  the  trunk  service  over  there. 

Letter  from  R.  P.  Houston,  M.  P.,  to  Herbert  Samuel,  British  Postmaster-General  (The  Daily 
Mail,  London,  England,  June  13,  1913) : 

If  the  present  chaotic  and  maddening  telephone  service  you  supply  to  the  public  is  to  continue 
I  would  suggest  that  the  Government  provide  special  lunatic  asylums  for  those  subscribers  who  will 
be  driven  mad  by  the  use  of  what  I  believe  to  be  the  most  inefficient  and  exasperating  telephone  serv- 
ice in  the  world. 

British  Parliamentary  Debates,  Official  Report,  April  24,  1913,  pp.  621-622: 
Mr.  Long  :  *  *  *  Since  the  telephone  was  taken  over  by  the  Post  Office  the  actual  service 
has  in  many  cases  not  been  so  good,  and  complaints  have  enormously  increased.  I  speak  as  one  who 
has  used  the  telephone  himself  at  his  own  residences  under  the  National  Telephone  Company  and  to- 
day under  the  Post  Office.  I  have  found  nobody  whose  experience  differs  from  my  own,  and  I  say 
that  there  were  less,  complaints  then  than  there  are  now,  that  I  had  less  interruptions  in  the  conversa- 
tions which  took  place,  and  that  the  system  worked  better  and  more  smoothly. 

British  Pariiamentary  Debates,  Official  Report,  April  24,  1913,  p.  594: 

Mr.  Goldman:  *  *  *  There  is  no  comparison  between  the  trunk  (long  distance)  service 
here  and  that  in  the  United  States.  In  the  United  States  the  trunk  service  is  known  as  a  no-delay  serv- 
ice, while  in  this  country  it  is  known  as  an  all-delay  service. 

Statement  by  C.  S.  Goldman,  M.  P.,  in  an  article  in  The  Daily  Graphic,  London,  England, 
March  3,  1913: 

Our  telephones  may  truly  be  described  as  "the  get-them-when-you-can  service."  This  is  not 
good  enough.  The  post  is  regular.  Deliveries  can  be  relied  upon  to  be  made  at  a  certain  hour ;  even 
telegrams  have  some  certainty  in  time ;  and  when  one  person  at  one  end  of  the  wire  wishes  to  speak 
to  another  person  at  the  other  end  of  that  wire  he  should  be  able  to  do  it  quickly  and  well.  The  tele- 
phone in  this  country  is  a  disappointment  as  a  vehicle  of  efficient  and  reliable  communication. 

From  Parliamentary  Debates,  Official  Report,  Great  Britain,  May  20,  1912: 
Mr.  Baikd:  I  wish  to  say  a  few  words  about  the  telephones  in  London.  I  think  the  transfer 
of  the  telephones  to  the  Government  has  been  a  proof  of  the  calamity  of  pushing  upon  the  Govern- 
ment the  control  of  a  monopoly  upon  which  the  comfort  of  the  public  depends.  After  a  considerable 
experience  of  telephones  in  a  great  many  countries,  I  have  no  hesitation  in  saying  that  there  is  noth- 
ing, even  in  Abyssinia,  half  as  bad  as  the  telephone  service  in  London  to-day. 

British  Parliamentary  Debates,  Official  Report,  May  20,  1912,  p.  1660: 

Sir  Gilbert  Parker  ;  *  *  *  that  reform  has  not  been  carried  out  in  the  telephone  system  is 
evident  to  everybody  who  has  suffered  as  I  have  from  morning  until  night,  having  a  good  deal  of 
business  to  do  over  the  telephone  wires.  There  has  been  nothing  said  to-day  in  criticism  of  the  tele- 
phone system  which  is  not  abundantly  justified,  because  if  you  go  to  the  utmost  corners  of  the  world 
you  will  find  a  better  system  in  existence  than  is  to  be  found  in  this  country,  and  particularly  in 
London. 

35 


The  Daily  Mail,  London,  England,  February  9,  1912: 

Lord  Devonport,  chairman  of  the  Port  of  London  Authority,  wrote  in  The  Times  yesterday  as 
follows : 

"As  Parliament  is  not  at  present  available,  may  I  be  allowed  through  the  publicity  of  your 
columns  to  inquire  of  the  Postmaster-General  on  what  date  he  hopes  to  restore  the  telephone  service 
to  its  normal  state  of  efficiency  and  usefulness?  At  the  moment,  so  far  as  the  Port  Authority  is  con- 
cerned, it  has  ceased  to  be  a  reliable  aid  to  business." 

From  "La  gestion  par  I'Etat  et  les  municipalites"  (State  and  Municipal  Mismanagement),  by 
Yves  Guyot,  Ex-Minister  of  Public  Works,  France,  1913,  pages  349-50  (Translation)  : 

In  1905,  on  returning  from  the  United  States,  I  found  again,  in  Paris,  all  the  charms  of  the 
telephone.  I  rang,  but  it  was  only  at  the  end  of  one  or  two  minutes  that  the  operator  answered.  I 
heard  calls,  other  numbers,  conversations ;  and  I  waited  until  they  were  good  enough  to  say,  "They 
don't  answer," — referring  to  houses  where  employees  are  stationed  at  the  telephone  permanently, — or 
else  the  refrain,  "Line  is  busy,"  which,  of  course,  cannot  be  verified  until  later  on. 

I  took  a  notion  to  complain.  As  a  result,  I  had  to  do  penance  for  a  fortnight.  No  one  could 
get  connection  with  me,  nor  could  I  get  connection  with  anyone  else.  I  felt  that  I  had  earned  a  re- 
ward for  my  patience.  The  Administration,  obsessed  by  this  subscriber  who  complained  so  persist- 
ently, said  to  me  at  last: 

"Come  and  see  the  Gutenberg  exchange." 

I  went  to  see  the  Gutenberg  exchange.  I  spoke  of  the  United  States,  where,  in  New  York, 
even  in  the  busiest  hours,  all  connections  are  made  almost  instantaneously. 

"What  do  you  expect?"  said  the  official  who  accompanied  me,  and  whom  I  met  in  New  York. 
"Those  are  private  companies!" 

From  Official  Report,  by  Senator  Emile  Dupont,  in  the  1912  Budget,  Post  &  Telegraphs,  in 
French  Senate  Document  No.  35,  Appendix  to  Stenographic  Report,  Session  of  January  30,  1912, 
pages  74-75  (Free  Translation) : 

COMPLAINT  OF  THE  BOARD  OF  TRADE  OF  THE  CITY  OF  VALENCIENNES. 

*  *  *  We  are  bound  to  state  that,  at  present,  it  is  useless  to  count  on  the  telephone  as  a  rapid 
means  of  communication  between  Paris  and  our  city.  The  Postal  Administration  has  known  this  fact 
for  several  years.  At  the  end  of  the  year  1908  it  made  arrangements  for  the  construction  of  a  third 
circuit  between  Paris  and  Valenciennes.  The  work  of  line  construction  commenced  at  the  beginning 
of  1909.  At  the  present  moment  it  is  not  yet  finished.  Now  each  time  that  this  subject  is  brought  by 
our  Chamber  of  Commerce  to  the  attention  of  the  .Xdministration  the  answer  is  received  that  opera- 
tions are  continued  without  interruption,  that  they  are  pushed  with  vigor,  but  there  is  no  result.  Now 
what  is  the  need  of  taking  three  years  in  order  to  construct  a  telephone  circuit  of  230  kilometres  (143 
miles)?    Isn't  this  disconcerting? 

Statement  of  Deputy  Joseph  Noulcns,  Reporter  of  the  Committee  of  the  French  Chamber  of 
Deputies  on  Posts  and  Telegraphs  (as  published  in  Le  Journal,  Paris,  reprinted  in  the  National  Tele- 
phone Journal,  London,  England,  September,  1908,  p.  24) : 

The  universal  indignation  aroused  by  the  Paris  telephone  service  is  fully  justified.  Prolonged 
delays  in  answering  calls,  bad  hearing  and  repeated  interruption  of  conversation,  are  the  ordinary  fea- 
tures of  the  Paris  telephone  service,  and  are  daily  endured  by  the  unhappy  subscribers. 

From  the  Report  on  the  French  Budget  for  Posts  and  Telegraphs  for  1907,  by  Deputy  Steeg, 
p.  67  (Translation) : 

The  average  time  for  connecting  two  subscribers  in  Paris  is  1  minute  and  50  seconds,  if  we 
are  to  believe  the  Administration.  In  America,  the  time  that  elapses  between  the  subscriber's  call  and 
the  moment  when  be  obtains  connection  is,  at  most,  16  or  17  seconds.    The  difference  is  appreciable! 

36 


New  York  Herald,  Februar)-  9,  1905 : 

M.  Marcel  Sembat,  who  is  charged  with  the  duty  of  reporting  on  the  estimates  for  this  branch 
of  the  public  ser\ice,  remarked  that  in  other  countries,  notably  in  America,  the  telephone  service  is 
more  satisfactory  than  in  France.    He  added: 

"In  America  particularly  it  has  reached  a  degree  of  perfection  that  we  dare  not  even  hope  for 
in  France." 

Proceedings  in  the  Dresden,  Germany,  City  Council  (Translated  from  the  Drcsdncr  Anzeigcr, 
July  5,  1913)  : 

Resolved,  that  the  council  ask  the  executive  board  to  present  to  the  Imperial  Postal  Adminis- 
tration a  petition  for  removal  of  the  shortcomings  in  the  Dresden  telephone  service,  which  are  not 
alone  to  be  explained  by  the  change  to  the  semi-automatic  system. 

Councilman  Kohlmann :  *  *  *  It  makes  no  difference  what  the  cause  may  be :  the  present 
condition  is  unbearable.  If,  as  I  have  been  told,  the  threat  to  shut  down  the  telephone  for  months  if 
the  complaints  do  not  stop,  is  true,  even  that  might  be  better  than  having  a  telephone  which  can  be 
used  only  occasionally. 

************ 
Councilman  Kiihn :  Gentlemen !  The  opinion  is  unanimous  that  the  present  condition  of  the 
Dresden  telephone  service  is  unbearable  and  deserving  of  the  severest  criticism.  It  might  seem  that 
Herr  Kohlmann  had  said  enough,  but  I  believe  that  the  arbitrary  way  the  Postal  Administration  has 
dealt  with  the  complaints,  in  view  of  the  scandalous  conditions,  should  make  it  our  duty  to  criticise 
very  sharply. 

Criticism  of  German  Telephone  Service  by  Herr  Haberland,  Deputy,  on  February  18,  1913, 
during  a  debate  in  the  Reichstag: 

The  average  time  to  get  a  connection  (long  distance)  in  Berlin  is  IJ/2  hours.  Unless  the  call 
is  classified  as  urgent,  the  connection  takes  several  hours. 

From  an  article  by  A.  Bartolini,  Royal  Commissioner  for  the  Reorganization  of  the  Postal  and 
Telegraph  Service  in  Italy,  published  in  Rivista  dellc  Comunkaciom  (official  organ  of  the  Italian  Min- 
istry of  Posts  and  Telegraphs),  October,  1913,  pp.  848-9  (Translation) : 

The  criticisms  directed  against  the  Postal  and  Telegraph  Administration  are  numerous  and 
varied.  To  realize  their  importance,  one  need  only  read  the  political  and  technical  papers  each  day, 
and  keep  track  of  the  proposals  and  suggestions  made  by  the  reporter  for  the  Postal  and  Telegraph 
Budget  each  year. 

************ 

All  this  might  be  attributed,  in  large  measure,  to  the  easy  and  quick  susceptibility  of  the  Latin 
and  particularly  of  the  Italian  temperament ;  but  that  is  not  so.  There  still  ring  in  the  ears  of  those 
who  were  members  of  the  Commission  which  investigated  the  postal  and  telegraph  offices  throughout 
the  Kingdom,  the  vehement  invectives  uttered  by  the  Chambers  of  Commerce  of  Genoa,  Turin,  Milan, 
Venice,  Naples,  Palermo,  etc.,  against  the  manner  in  which  the  postal,  telegraph  and  telephone  service 
is  conducted  in  Italy.  These  bodies,  giving  direct  expression  to  the  needs  of  commerce  and  industry, 
said,  in  substance : 

"If  the  State  is  incapable  of  conducting  the  postal  and  telegraph  service  as  it  should  be  con- 
ducted, let  it  be  entrusted  to  us  without  more  ado,  and  we  will  operate  it  directly,  providing  the  neces- 
sary capital  and  adopting  suitable  administrative  and  accounting  methods." 

From  a  pamphlet  printed  in  1910  by  the  Italian  Postal  Telegraph  Clerks'  Association,  Hon. 
Filippo  Turati,  Member  of  Parliament,  Italy.  President  (Translation) : 

The  (telegraph)  service  will  continue  on  its  road  to  ruin,  and  the  country  will  endure  the  losses 

37 


and  the  jests.  The  Ministry  of  the  Post  and  the  Telegraph  will  then  perhaps  decide  to  send  its  tele- 
graphic functionaries  to  Canada  and  Venezuela  in  order  that  they  may  learn  there  the  great  progress 
of  the  science. 

Report  by  United  States  Minister  Charles  J.  Vopicka,  Bukharest,  Roumania,  printed  in  Daily 
Consular  &  Trade  Reports,  January  9,  1914: 

The  Director  of  Posts  and  Telephones  has  issued  a  statement  to  the  effect  that  a  direct  wire  is 
now  open  between  the  cities  of  Bukharest  and  Vienna.  Until  further  notice  only  one  city  in  this 
country  will  be  able  to  have  direct  telephone  communication  with  Vienna,  Cernovitcz,  Lemberg,  and 
Cracovia.  The  telephone  rate  for  three  minutes  between  Bukharest  and  Cernovitcz  will  be  3.50  francs 
(68  cents)  ;  between  Bukharest  and  Lemberg,  4.50  francs  (87  cents)  ;  between  Bukharest  and  Cra- 
covia, 5.50  francs  ($1.06)  ;  between  Bukharest  and  Vienna,  6.50  francs  ($1.25).  In  the  event  of  a 
demand  for  the  quickest  possible  connection,  the  regular  rate  is  tripled. 

(Foreign — Editorial) 

The  Daily  Mail,  London,  England,  December  27,  1913 : 

Since  the  Government  took  over  the  working  of  the  lines  and  public  interest  in  the  efficiency  of 
telephonic  communication  became  proportionately  vigilant,  a  catalogue  of  errors  and  misdemeanors 
has  been  compiled  that  would  have  driven  any  private  company  out  of  business. 

Article  by  Charles  Brunning,  in  the  Liverpool,  England,  Evening  Express  (reprinted  in  the 
Boston,  Mass.,  Herald,  July  26,  1913: 

Foreigners  mistake  the  e.xcellence  and  quickness  of  the  American  system  for  hustle.  The  Amer- 
ican does  things  more  easily  than  we  do.  In  the  first  place  he  doesn't  write  so  many  letters — he  simply 
telephones. 

And  here  let  me  voice  my  admiration  of  that  wonderful  institution,  the  American  telephone. 
"Wiretalking"  in  America  is  all  done  so  quietly,  so  comfortably,  so  easily,  so  surely — either  local  or 
long  distance — that  one  wonders  how  a  civilized  people  like  we  are  presumed  to  be  can  stand  our 
ridiculous  English  telephone  system.     Truly  we  are  a  long  suffering  people. 

Rarely  does  an  American  shout  in  his  telephone.  He  speaks  in  a  soft,  easy  voice,  for  all  the 
world  like  a  man  saying  his  prayers  in  church. 

Pall  Mall  Gazette,  London,  England,  December  11,  1913: 

In  the  closing  days  of  that  corporation  the  service  was  notoriously  defective:  an  out-going  ten- 
ant cannot  be  expected  to  show  much  zeal  for  improvements.  But  since  the  new  management  came 
in,  bad  has  gone  to  worse,  and  dissatisfaction  is  more  em]ihatic  and  general  to-day  than  at  any  time 
since  the  invention  was  introduced  to  this  country.  Mr.  Samuel  asks  further  indulgence,  but  we  are 
entitled  to  have  a  time-limit  set  to  the  invocation  of  the  old  familiar  excuses  and  extenuations.  The 
present  state  of  matters  is  a  handicap  on  every  kind  of  national  interest.  All  foreigners  confess  that 
until  they  tried  to  use  our  telephones  they  h^d  never  realized  the  self-abnegation  and  moral  loftiness 
of  the  British  character. 

From  a  letter  to  the  London,  England,  Times,  December  9,  1913,  by  Sir  Francis  Trippel : 

Sir: — In  a  large  nursing  home  in  Fitzroy-square,  where  30  patients  are  lying  more  or  less  ser- 
iously ill,  the  telephone  got  out  of  order  about  6  p.  m.  on  Saturday.  Every  effort  was  made  by  the 
lady  superintendent  to  have  the  matter  put  right,  but  the  telephone  officials  said  that  nothing  could  be 
done  on  a  Saturday  night  or  Sunday.  Repeated  applications  were  unavailing,  and  the  nursing  home 
remained  cut  off  from  telephonic  communication  during  Saturday  night  and  all  day  and  night  yester- 
day. *  ♦  *  It  was  not  till  after  40  hours'  interrupted  service  that  the  telephone  was  in  order  again, 
and  it  required  only  a  couple  of  screws  to  be  fixed  in  the  receiver — a  few  minutes'  work. 

Now,  Sir,  this  disgraceful  state  of  organization  in  the  telephone  service  must  cease  to  exist. 
When  it  may  be  a  question  of  life  or  death  at  any  moment,  the  public  has  a  right  to  demand  that 

38 


instant  provision  should  be  made  for  such  an  occurrence  never  to  happen  again  between  Saturday 
night  and  Monday  morning,  and,  if  left  undone,  the  responsible  authorities  lay  themselves  open  to  a 
charge  of  criminal  neglect.  Vours   faithfully, 

Claridge's  Hotel,  Dec.  8.  Francis  Trippel. 

Metropolitan  Magazine,  New  York,  August,  1913 : 

The  telephone,  for  instance ;  if  you  want  a  nice  test  of  temper,  try  to  get  a  number  at  the  Hotel 
Cecil  in  London ;  or,  better  still,  spend  a  happy  morning  in  ringing  up  people  on  the  telephone  in 
Paris.  In  America  it  is  either  done  for  you  at  once  or  you  know  it  cannot  be  done,  and  the  matter  is 
settled. 

The  Standard,  London,  England,  August  13,  1913: 

As  an  instance  of  the  delay  and  muddle  of  the  State  telephone  system  nothing  has  yet  surpassed 
the  treatment  by  the  authorities  of  a  Birmingham  correspondent,  who  has  vainly  sought  to  be  connected 
since  November  last.  The  Post  Office  actually  suggested  that  he  had  better  move  to  another  house, 
so  that  his  request  could  be  the  more  easily  complied  with. 

New  York  Times,  August  10,  1913: 

A  subscriber  writes  to  the   (London)   Daily  Mail,  telling  this  story: 

Sir:  I  have  found  that  numbers  of  friends  who  have  tried  to  rinj,-  me  up  have  always  been  in- 
formed that  no  reply  could  be  obtained.  On  one  or  two  occasions  my  bell  rang,  and  when  I  put  the 
receiver  to  my  ear  I  could  distinctly  hear  the  operator  saying  "No  reply"  or  "Engaged"  to  the  person 
who  was  trying  to  ring  me  up. 

I  determined  to  test  this,  and,  leaving  my  secretary  one  morning  with  the  telephone  in  front  of 
her,  went  out  to  a  call  office  near.  I  asked  for  my  own  number,  and,  after  waiting  three  minutes,  was 
informed  that  the  operator  could  get  no  reply.  I  asked  her  to  try  again,  and,  after  wating  five  min- 
utes, was  informed  there  was  no  reply.  I  then  repeated  the  number  and  asked  her  to  try  once  again, 
and  in  about  half  a  moment  the  engaged  signal  began  to  go.  I  waited  until  this  buzzing  had  ended, 
and  then  I  said  to  the  operator: 

"I  think  it  is  only  right  to  tell  you  that  it  is  my  own  number  I  am  trying  to  ring  up  from  a  call 
office  just  outside  my  flat,  and  my  secretary  is  sitting  waiting  for  this  call." 

I  was  put  through  immediately,  and  my  secretary  informed  me  that  she  had  not  moved  away 
from  the  telephone,  and  no  bell  had  rung. 

Electrical  Industries,  London,  England,  December  4,  1912: 

There  is  a  certain  amount  of  satisfaction  in  the  fact  that  Mr.  Winston  Churchill  got  so  angry 
over  the  freaks  of  the  telephone  the  other  day  that  he  flung  his  receiver  on  the  floor.  As  a  member 
of  the  Government  which  purchased  the  telephone  system,  he  deserves  all  the  torture  that  Post  Office 
working  can  inflict.  But  his  rage,  and  the  delicate  remonstrance  which  he  doubtless  addressed  to  his 
right  honorable  colleague  on  the  subject  do  not,  unfortunately,  make  the  organization  any  better  for 
the  average  subscriber. 

London,  England,  Clobe,  September  12,  1912: 

Apparently,  the  Postmaster-General  is  of  the  oijinion  that  a  policy  of  masterly  inactivity  will 
eventually  force  the  public,  in  sheer  despair,  to  cease  from  grumbling,  and  give  the  telephone  author- 
ities some  rest.  If  that  is  his  belief,  we  can  only  say  that  he  is  mistaken.  We  English  are  a  patient 
race,  but  we  do  not  intend  to  put  up  with  the  worst  telephone  service  in  the  world  forever. 

The  Standard,  London,  England,  January  2,  1914  (Letter  from  its  Paris  Correspondent) : 

I  went  to  the  Bourse  Centrale  soon  after  eleven  the  other  night  and  found  one  employee  busy 

in  taking  down  applications  for  calls  from  a  crowd  of  impatient  journalists  and  men  of  business  of 

all  nationalities.     From  time  to  time  he  would  shout  out  a  name,  "Popolo,"  "Secolo,"  "Tribuna,"  and 

a  joyful  Italian  would  spring  forward  and  be  allotted  one  of  the  nine  cabins.    His  joy  was  premature, 

39 


apparently,  however,  for  during  the  next  few  minutes  a  string  of  stentorian  complaints  echoed  from 
within,  "Nome  di  Dio !  Rispondete !  Dunque !  Non  mi  intendete !  Santissima  Virgo !"  Then  would 
come  a  Berlin  line  open,  and  a  repetition  in  German  of  "Donnerwetter !     Scandal,  Gotteswill!"  etc. 

Through  all  this  the  weary  operator  imperturbably  sat  on,  impervious  to  objurgations  and  en- 
treaties. There  was  a  short  circuit  somewhere,  and  it  was  no  use  swearing  at  him.  In  pity  I  asked 
him  how  long  he  was  expected  to  stand  this  work.  "I  come  in  at  nine  in  the  evening  and  stay  till  eight 
in  the  morning,"  was  the  reply.  One  wretched  man  for  eleven  hours  to  meet  the  whole  interprovin- 
cial  and  international  telephonic  requirements  of  Paris! 

Springfield,  Mass.,  Union,  September  23,  1913: 

It  is  a  sad  commentary  on  the  French  telephone  service  that  Aviator  Gilbert  on  Sunday  flew 
100  miles  from  Paris  to  Reims  in  55  minutes,  and  that  he  arrived  at  his  destination  before  news  of 
his  departure  could  be  telephoned. 

Le  Temps,  Paris,  France,  August  31,  1913: 

To-day  our  colleague,  "L'Auto,"  protests  against  the  difficulties  which  assail  one  when  one 
wants  to  use  the  telegraijh  or  telephone. 

"A  telegram  which  was  handed  in,  in  Deauville,  the  28th  of  August  at  9.15  p.  m.,"  says  our 
confrere,  "was  received  in  the  office  of  'L'Auto'  the  next  morning,  August  29,  at  2  o'clock. 

"A  telegram  which  was  handed  in,  in  Leipzig,  the  28th  of  August  at  9.30  p.  m.,  reached  the 
office  of  'L'Auto'  the  next  morning,  August  29,  at  6  o'clock. 

"As  for  the  telephone,  it  is  no  better:  Of  the  15  cities  constituting  the  relay  points  for  the 
bicyclists'  tour  of  France,  we  were  able  to  get  telephone  communication  willi  only  five  or  six.  The 
exchanges  answered  regularly:  'Such  and  such  city  *  *  *  line  out  of  order,'  'Such  and  such  a  city 
♦     *     *     line  out  of  order!'" 

"Those  lines  which  we  had  taken  the  trouble  to  have  reserved  for  June  12  for  our  interurban 
conversations,  were  not  actually  free  until  the  latter  half  of  July:  the  Tour  of  France,  by  that  time, 
was  two-thirds  accomplished !" 

Article  by  C.  F.  Bertelli,  of  Paris,  in  Leslie's  Weekly,  May  15,  1913: 

What  would  the  New  Yorkers  who  grumble  at  a  few  seconds'  wait  do  if  they  were  at  the 
mercies  of  the  Administration  des  Postes  Telegraphes  et  Telephones,  or  "P.  T.  T.,"  as  it  is  familiarly 
called?  An  authoritative  series  of  tests  carried  out  a  short  time  ago  showed  that  the  Paris  system  is 
at  least  seven  and  a  half  times  slower  than  the  American !  Whereas  the  average  time  required  to  get 
into  communication  in  New  York  is,  according  to  latest  figures,  eleven  seconds  (beaten  by  several 
other  cities  in  New  York  State),  the  French  capital  is  content  to  wait  1  minute,  20.8  seconds!  The 
tests  were  perfectly  fair,  being  made  at  the  time  of  day  when  there  is  least  rush.  They  were  made 
from  all  parts  of  the  city,  and  from  all  sorts  of  places — post-offices,  private  apartments,  hotels,  busi- 
ness offices,  cafes,  etc.,  and  the  greatest  possible  variety  of  subscribers  were  rung  up. 

Letter  from  a  French  telephone  subscriber  to  Le  Petit  Phare  de  Nantes,  reprmted  in  the 
Bulletin  de  I'Association  des  Abonnes  au  Telephone,  Paris,  France,  September,  1912  (translation)  : 

Sir: — In  one  of  your  recent  issues  of  the  Phare,  mention  was  made  of  the  protest  of  a  sub- 
scriber, who,  having  asked  for  connection  with  Rennes,  was  informed  that  he  must  wait  eleven  hours 
in  order  to  obtain  it.     This  record  seemed  unbeatable,  and  justly  so. 

But  to-day  I  found  I  had  to  talk  with  Saint-Malo,  and,  wishing  to  be  put  through  quickly,  I  had 
my  name  inscribed  on  the  waiting  list  first  thing  in  the  morning ;  the  operator  told  me — though  very 
ainialily,  T  nuist  confess — that  I  would  have  to  wait  thirteen  hours  and  ten  minutes  (you  are  reading 
it  right)   in  order  to  be  put  through. 

Zeitschrift  fiir  Sclnvachstromtechuik.  Munich,  Germany,  September,  1913  (translation)  : 
In  an  earlier  issue  we  reported  the  stormy  scenes  which  the  disturbances  in  the  Dresden  tele- 
phone service  occasioned  in  the  Dresden  council  meetings.    These  disturbances  have  been  manifest  for 

40 


several  months,  beginning  with  the  installation  of  the  semi-automatic  system,  and  have  made  the  tele- 
phone practically  useless  for  a  largo  number  of  the  subscribers.  This  disorder  has  increased  to  such 
a  degree,  and  has  lasted  so  long,  that  many  subscribers  have  decided  to  refuse  to  pay  their  telephone 
bills.    This  will  probably  give  rise  to  more  or  less  activity  in  the  courts. 

Article  by  Dr.  R.  Luther,  Head  Professor  at  the  Dresden  Technische  Hochschule,  in  the  Dres- 
den, Germany,  Anzeigcr,  June  28,  1913  (translation)  : 

It  is  an  irony  of  fate  that  the  American  engineers  who  came  to  study  our  "nrodel  technical 
works"  should  have  visited  us  just  at  the  time  of  this  telephone  anarchy.  When  they  get  home,  these 
gentlemen  can  relate,  with  pitying  superiority,  that  in  the  year  1913,  thirty-si.x  years  after  the  dis- 
covery of  the  electro-magnetic  telephone,  in  the  age  of  the  beginning  of  wireless  telegraphy,  one  of 
the  largest  cities  of  Germany,  Dresden,  with  over  half  a  million  inhabitants,  is  without  adequate  tele- 
phone facilities. 

New  York  Times,  May  5,  1913: 

Berlin,  May  4. — Remarkable  evidence  as  to  the  effect  of  the  telephone  upon  the  minds  of 
people  using  it  was  given  in  a  trial  yesterday.  Dr.  Strauch,  a  commissioner  in  lunacy,  said  that  even 
phlegmatic  men  might  have  their  mental  balance  upset  by  exasperation  at  getting  no  reply  from  "Cen- 
tral." He  mentioned  the  case  of  one  of  his  own  patients,  a  well-known  doctor,  who  became  completely 
insane  through  telephone  exasperation. 

Dr.  Paechter,  another  witness,  asserted  that  he  could  bring  evidence  to  show  that  Government 
telephone  girls  had  been  permitted  by  the  inspectors  to  utilize  one  of  the  big  exchanges  for  the  recep- 
tion of  their  fiances.  One  amusement  of  the  girls  of  this  exchange  was  to  look  up  all  subscribers 
having  the  same  name,  to  connect  all  of  them.,  ring  them  all  up,  and  laugh  loudly  at  the  result. 

New  York  Times,  September  18,  1912: 

Berlin,  Sept.  17. — Three  engineering  officials  of  the  German  Post  Office  Department  are  about 
to  sail  for  the  United  States  in  order  to  investigate  American  telephone  systems.  *  *  *  Ameri- 
can telephones  are  regarded  in  Germany  as  the  best  in  the  world,  and  the  hopes  and  prayers  of  busi- 
ness men  and  householders  accompany  the  Post  Office  Department's  Commissioners  to  America. 

Mattino,  Naples,  Italy,  November  6,  1910  (translation)  : 

At  a  meetmg  of  the  Chamber  of  Commerce  on  November  4,  1910,  the  President,  referring  to 
the  Royal  Commission  appointed  to  investigate  the  complaints  of  the  telegraph,  postal  and  telephone 
services,  stated  that  he  had  brought  to  their  attention  the  great  deUys  in  the  delivery  of  telegrams 
and  the  execrable  telephone  service,  and  that  he  was  obliged  to  sa}  that,  since  the  Government  had 
taken  over  the  telephone  company,  the  service  was  far  worse  in  every  respect,  and  that  he  had  taken 
steps  to  send  a  full  report  to  the  Commission. 

From  I'ltalie,  Rome,  Italy,  November  5,  1910  (translation)  : 

Meetings  have  been  held  at  the  various  chambers  of  com.mprce  throughout  It;  ly,  but  it  seems 
that  nothing  is  done  to  remedy  the  existing  state  of  affairs,  and  every  one  is  complaming  of  the  utter 
impossibility  of  relying  upon  the  telegraph  service.  ^ 

From  I'ltalie,  Rome,  Italy,  November  5,  1910  (translation) :  -"bei, 

A  telegram  sent  from  Paris  yesterday,  at  2.37  p.  m.,  was  received  i"~""'he  at  8.20  p.  m. 

Six  hours  for  transmission !  " 

And  this  telegram  was  not  given  a  messenger  until  9  p.  m.  ^ 

Forty  minutes  for  it  to  pass  from  the  receiving  room  into  the  pocket     ^  the  messenger! 

This  message  was  very  urgent,  and  asked  that  certain  documents  be  jcnt  off  at  once  by  mail. 

As  the  mail  train  starts  for  France  at  8.40  p.  m.,  it   was,   of   course,   impossible    for  the   recipient,   a 

reporter,  to  do  as  requested,  and  this  delay  caused  serious  inconvenience. 


41 


\ 


The  Italian  Telegraph  administration  takes  undue  advantage  of  the  fact  that  the  Government 
incurs  no  legal  responsibility  for  the  telegraph  service ! 

From  the  Die  Zeit,  Vienna,  Austria,  reprinted  in  the  Elektrotechnische  Zeitschrift,  Berlin,  Ger- 
many, April  24,  1913  (translation) : 

For  some  time,  it  has  been  difficult  to  connect  new  telephones  in  the  Vienna  Exchange.  The 
Postal  Administration  has  several  thousand  unfilled  applications,  some  of  which  have  been  put  aside 
for  years,  and  it  cannot  be  expected  that  these  applications  will  be  filled  for  some  time.  This  state  of 
affairs  exists  in  almost  every  part  of  Vienna;  in  some  parts  construction  work  has  been  entirely  sus- 
pended, in  others  it  is  only  carried  on  in  a  desultory  manner.  ♦  *  *  Jhe  dissatisfaction  among 
Vienna  subscribers,  and  among  those  who  might  become  subscribers,  is  very  great. 

New  York  Press,  December  23,  1913: 

When  anybody  on  one  side  or  the  other  of  this  debate  talks  rates  and  costs,  they  ought  to  be 
careful  to  make  it  clear  what  service  is  given  the  public,  for  the  cost  in  each  case  and  what  the  rela- 
tive rate  is.  Mr.  Lewis  must  know,  for  example,  that  when  you  hand  in  an  ordinary  telegraph  message 
in  virtually  any  Government  office  on  the  whole  continent  of  Europe  your  message  may  go  through  in 
forty-eight  hours ;  it  may  by  accident  go  through  in  thirty-six  hours ;  it  may  by  a  miracle  go  through 
in  twenty-four  hours ;  but  if  you  want  to  get  it  through  in  a  few  hours  you  have  to  pay  double  and 
even  triple  rates. 

The  Government  service  in  France,  Germany,  Italy,  and  Switzerland  did  not  make  any  pretense 
of  getting  an  ordinary  telegraph  message  through — even  short  distances — within  many,  many  hours  of 
the  time  you  can  flash  an  ordinary  message  in  this  country  from  one  side  of  the  continent  to  the  other 
and  have  an  answer  back  on  top  of  it. 


RATES 
{Foreign — Official) 

From  the  Minutes  of  Proceedings  of  a  Deputation  from  the  London  ChanAer  of  Commerce 
which  waited  upon  the  Right  Hon.  Herbert  Samuel,  M.  P.,  Postmaster-General  of  Great  Britain,  July 
4,  1913: 

Mr.  Faithfull  Begg:  *  *  *  There  is  one  other  very  important  point  to  which  I  am  asked 
to  refer  and  that  is  the  question  of  the  rates  themselves.  Now  at  the  time  of  the  transfer  I  think  it 
may  be  fairly  said  that  specific  assurances  were  given  or  general  assurances  that  the  result  of  the  taking 
over  by  the  Post  Office  would  net  be  anything  in  the  nature  of  a  general  advance  in  rates,  and  I  think 
the  public,  rightly  or  wrongly,  concluded  that  as  a  matter  of  fact  they  would  get  their  telephones  for 
less.  I  never  shared  that  view,  but  I  ihink  it  was  a  more  or  less  general  view,  and  we  are  told — and 
I  think  there  is  e>-idence  throughout  the  country — that  there  arc  very  serious  complaints  of  increases 
in  rates.  ♦  *  *  Genergi'-  y  speaking,  the  Committee  is  of  opinion  that  it  can  be  shown  that  the 
changes  which  have  iskcd  '^ce  have  in  the  main  been  in  the  direction  of  a  considerable  increase 
in  rates.  »'     Th 

British  ParliaP""  -cbates.  Official  Report,  April  24,  1913,  page  594: 

Mr.  Goldman  :\s-^  *  The  Postmaster-General  himself  has  stated  that  he  would  give  us  ser- 
vice equal  to  that  of  t\.  .  Jnited  States,  if  we  were  prepared  to  pay  rates  such  as  they  are  paying, 
say,  between  Liverpool  and  London,  a  rate  of  5s.  instead  of  the  existing  rate  of  2s.  6d.  The  Post- 
master General  should  no\forgct  that  2s.  6d.  in  this  country  is  almost  equivalent  to  5s.  in  America. 

•  I  only  want  to  p<Smt  out  to  the  Postmaster-General  himself,  who  wanted  to  make  out  that 
he  could  give  us  an  equivalent  service  if  we  were  ready  to  pay  5s.  instead  of  2s.  6d.,  which  we  are 

42 


V 


paying  now,  that,  wages  being  three  times  as  high  in  the  United  States  and  the  money  not  going  as 
far  as  in  this  countr>-,  we  ought  to  get  at  least  as  good  a  service  for  2s.  6d.  as  they  get  for  5s. 

British  ParHamentar>'  Debates,  Official  Report,  April  24,  1913,  page  576: 

Mr.  Herbert  S.amuel:  *  *  ♦  Jhe  time  is  approaching  for  a  revision  of  the  telephone  rates 
of  charge.  That  is  essential  in  view  of  the  inequalities  of  charge  between  subscribers  in  the  various 
districts. 

British  Parliamentary  Debates,  Official  Report,  April  24,  1913,  p.  591 : 

Mr.  Goldman  ;  *  *  *  xhe  question  which  the  Postmaster-General  raised  with  regard  to 
rates  will  only  be  received  in  this  House  and  outside  with  modified  satisfaction.  He  is  only  able  to 
promise  that  he  hopes  in  the  future  to  be  able  to  deal  with  the  rates,  which  he  ought  to  have  dealt 
with  at  least  two  years  ago. 

*  *  *  The  Postmaster-General  has  acknowledged  the  urgency  of  dealing  with  these  rates, 
because,  in  reply  to  a  speech  of  my  hon.  Friend  the  Member  for  Devizes,  he  stated  that  the  efficiency 
of  the  telephone  service,  and  its  development  and  extension,  largely  depended  upon  fixing  the  revision 
of  the  rates,  and  the  delay  in  the  development  and  improvement  which  a  large  number  of  subscribers 
are  suffering  from  to-day  owing  to  unfair  rates,  which  he  himself  acknowledges,  is  largely  due  to 
delay  on  the  part  of  the  Post  Office  in  dealing  with  the  question  of  rates 

British  Parliamentarj'  Debates,  Official  Report,  May  20,  1912,  p.  1566: 

Mr.  Herbert  Samuel  (Postmaster-General) :  *  *  *  I  am  considering  the  introduction  of 
a  system  of  urgent  telegrams  at  triple  rates  between  this  country  aiul  the  Continent  of  Europe. 

British  Parliamentary  Debates,  Official  Report,  May  20,  1912,  p.  1584: 

Mr.  C.  S.  Goldman  :  *  *  *  Although  the  system  may  be  more  expensive  in  this  country 
than  in  Germany,  I  do  not  believe  that  people  mind  spending  more  money  if  the  system  is  satisfac- 
tory, but  they  object  to  paying  these  high  rates  for  an  unsatisfactory  system,  because  no  one  can  be 
satisfied  when  they  have  to  wait  half  an  hour  or  even  an  hour  before  they  can  get  a  connection. 

British  Parliamentary  Debates,  Official  Report,  May  20,  1912,  p.  1586. 

Mr.  C.  S.  Goldman  ;  *  *  *  Perhaps  the  most  controversial  point  in  connection  with  tele- 
phones is  that  which  refers  to  rates.  This  question  has  also  been  the  subject  of  much  discussion. 
The  Postmaster-General  will  remember  that  only  last  year  he  received  a  big  deputation  from  over  one 
hundred  municipalities  in  England  urging  him  to  deal  with  this  question  of  the  rates.    *    *    * 

Report  on  the  French  Budget  for  Posts  &  Telegraphs,  1911,  by  M.  Charles  Dumont,  Deputy 
(translation)  : 

Finally,  telephone  service  in  Paris  is  subjected  to  all  the  inconveniences  of  a  flat  rate: — a  high 
subscription  which  deprives  small  and  medium  sized  merchants  from  competing  with  more  wealthy 
concerns — subscribers  whose  lines  are  occupied  almost  continuously  (cafes,  restaurants,  etc.),  and  who, 
for  the  sum  of  400  francs,  cause  the  Administration  a  hundred  times  more  work  than  an  ordinary  sub- 
scriber— the  difficulty  in  putting  through  calls  on  the  lines  of  these  subscribers,  which  are  almost 
always  occupied,  and,  consequently,  repeated  losses  of  time  for  the  operators — finally  useless  conver- 
sations, babbling  and  gossiping  by  telephone,  which  even  the  smallest  message  rate  would  discourage. 

From  the  letter  of  the  Belgian  Minister  of  Railways,  Post',  &  Telegraphs,  transmitting  to  the 
King  a  draft  of  the  law  providing  for  the  abolition  of  flat  rates,  -ind  the  adoption  of  measured  rates, 
published  in  Le  Moniteur  Beige,  Brussels,  September  16,  1911  (translation): 

The  system  known  as  the  flat  rate  system,  at  j)resent  in  eflFect  in  our  country,  has  gradually  been 
abolishtd  by  foreign  countries;  it  has  been  considered  irrational  and  unju.st,  and  as  forming  the 
greatest  obstacle  to  the  popularization  of  the  telephone. 

4.^ 


British  Parliamentary  Debates,  Official  Report.  June  19,  1911,  p.  85: 

Mr.  Morton  ;  *  *  *  There  is  a  general  feeling  that  the  cost  of  using  the  telephone  might 
be  considerably  reduced. 

British  Parliamentarj'  Debates,  Official  Report,  June  19,  1911,  p.  54: 

Mr.  Herbert  Samuel  :  *  *  *  I  am,  however,  now  being  pressed  to  promise  immediate  reduc- 
tions in  the  existing  telephone  rates,  and  those  who  complain  that  the  Post  Office  is  not  to  be  trusted  to 
manage  the  telephones  in  a  business-like  way  because  it  is  too  much  open  to  pressure  are  often  themselves 
the  first  to  bring  political  and  other  pressure  to  bear  in  order  to  secure  an  immediate  reduction  to  rates 
which  might  be  to  unremunerative  amounts. 

From  the  Report  of  the  Royal  Commission  Appointed  to  Investigate  the  Postal,  Telegraph  and 
Telephone  Services  of  the  Commonwealth  of  Australia  (ordered  to  be  printed  October  5,  1910)  : 

?p^sed°by  32.    *    *    *    The  evidence  disclosed  that  the  reductions  in  the  telephone  rates 

fnd"chie"*  **""*       were  made  on  the  advice  of  a  subordinate  officer,  and  in  opposition  to  the  advice  of 
Electrical  Engineer,    ^he  Permanent  Head  and  Chief  Electrical   Engineer,  and  your   Commissioners   con- 
sider that  the  then  Postmaster-General  took  action  without  having  any  sound  reason 
for  the  drastic  reduction  made. 


ratSi."^'""  *^  '°  187.     This  section  of  the  Report  will  be  confined  to  the  telephone  rates  and 

charges  imposed  upon  the  public  during  the  period  of  Federation.  The  evidence  dis- 
closed considerable  confusion  as  to  the  basis  of  the  charges  to  be  adopted.  Your  Com- 
missioners are  of  the  opinion  that  the  present  charges  are  grossly  inequitable  to 
certain  sections  of  the  public. 


wft'h^urftn"*""^  ^^-     From  the  evidence,  your  Commissioners  are  forced  to  conclude  that  these 

consideration.  ^ates  vycre  established  without  full  consideration  of  the  ultimate  result,  and  a  total 

disregard  of  the  experience  of  other  countries. 

From  the  Report  of  the'  Royal  Commission,  appointed  July  10,  1910,  to  investigate  the  telephone 
service  in  Italy  (translation)  : 

The  present  rates  are  not  proportionate  to  the  expenses  caused  by  the  various  classes  of  sub- 
scribers, and.  thus,  those  who  reap  the  least  profit  suffer  the  most,  and  those  to  whom  the  service  is 
of  greater  advantage  pay  the  least. 

Statement  in  the  German  Reichstag,  April  16,  1910,  by  the  Secretary  of  State  for  the  Post 
Office,  Published  in  the  Deutsche  Vcrkeltrszeitung,  Berlin,  Germany,  April  22,  1910  (translation) : 

*  *  *  I  am  well  awarti  that  during  the  first  deliberation  of  the  proposed  rate  law  various 
objections  were  raised  by  members  of  the  House  against  the  rate  law.    *    *     * 

The  renewed  presentation  Vf  the  rate  law  has  led  to  many  harsh  criticisms  in  the  dailies. 

Report  on  the  French  Buotet  for  Posts  &  Telegraphs,  1909,  by  M.  Chautard,  Deputy  (trans- 
lation) : 

The  flat  rate  system,  which  Is  in  effect  in  the  larger  cities  of  France,  precludes  a  good  service, 
whatever  the  excellence  of  the  personnel  and  the  equipment  may  be ;  this  is  to-day  the  unanimous 
opinion  of  engineers  and  telephone  managers  in  every  country,  and  it  is  an  opinion  definitely  and 
scientifically  established,  because  it  is\based  on  ven*-  wide  telephone  experience. 

44 


Elektrotechinsche  Zcitschrift,  Berlin,  Germany,  December  16,  1909  (translation) : 
A  commission  of  the  Hansa-Bund,  brought  together    from   all   circles   of    German   trades   and 
industries   for  consideration  of  the  proposed  changes  in  the  Telephone  Rate  Law,  has  unanimously 
voted  the  following  resolution,  which  is  to  be  sent  to  the  legislative  authorities : — 

"The  telephone  ought  to  be  a  tool  for  daily  use,  yet  in  Germany,  as  opposed  to  other  coun- 
tries, especially  Sweden,  it  has  not  obtained  the  popularity  and  usefulness  due  it,  chiefly  because 
its  use  heretofore  has  been  much  too  costly  for  large  circles  of  business,  particularly  for  the  mid- 
dle-sized and  small  trades  and  industries,  as  well  as  for  officers  and  householders. 

"Consequently,  we  regard  the  proposed  increase  in  cost  of  this  indispensable  and  yet  tech- 
nically imperfected  means  of  communication  as  a  measure  which  must  injure  not  only  these  wide 
circles  of  the  people,  but  also  the  Government  Postal  Department  itself.  We  are  of  the  opinion 
that  the  surplus  expected  from  this  increase  in  rates  would  be  obtained  sooner  by  a  reduction 
than  by  an  increase,  and  that  the  urgent  popularization  of  the  telephone  can  be  attained  by  a  gen- 
eral cheap  base  rate  and  a  measured  conversation  tax,  which  would  be  established  not  by  individual 
count,  but  by  blocks,  and  which  could  eventually  be  graded  according  to  use." 

Abstract  from  Debate  in  the  Reichstag,  Germany,  March  3,  1909,  published  in  Archiv  filr  Post 
&  Telegraphie,  Berlin,  April,   1909   (translation)  : 

The  Secret.\ry  of  State  for  the  Post  Office:  *  *  *  It  is  well  known  to  you  that  soon 
after  the  introduction  of  the  Telephone  Rate  Order  the  desire  arose  to  ojtain  a  greater  equalization. 


The  new  rate  order  was  arrived  at  as  a  result  of  experience  and  the  demands  of  the  House. 
They  were  carefully  considered  in  conference  with  the  South  German  Postal  Government.  After 
conclusions  had  been  made,  the  chief  commercial  associations  were  asked  to  name  a  number  of  men 
whom  they  considered  competent  to  advise  the  Government  in  this  matter.  The  plan  was  submitted 
to  these  men  for  advice  and  suggestions,  and  a  majority  of  them  supported  the  new  schedule.  The 
objection  all  came  from  the  smaller  class  which  will  suffer  disadvantage  from  the  new  order;  but  they 
only  amount  to  about  30  or  35  per  cent.,  and  the  rest  of  the  people  are  pleased  with  it.     *     *     * 

The  objection  is  made  that  we  pay  the  operators  and  general  personnel  too  little;  and  that  the 
hours  are  too  long.  But  where  is  the  money  coming  from,  especially  when  there  is  a  constant  cry 
for  reduced  rates ! 

From  the  Report  on  the  French  Budget  for  Posts  and  Telegraphs  for  1905,  by  M.  Marcel  Sem- 
bat,  p.  61  (translation)  : 

Moreover  the  high  subscription  rate,  400  francs,  prevents  a  great  number  of  little  shop  keepers 
and  little  business  men  from  having  the  telephone. 

(Foreign — Editorial) 

Liverpool,  England,  Daily  Post  and  Mercury,  October  29,  1913: 

Mr.  Ogilvie's  speech  to  the  Advisory  Committee  affords  rather  cold  comfort  to  those  of  us  who 
have  been  hoping  that  under  Government  control  telephone  rates  would  be  materially  reduced.  We 
seem  to  remember  that  another  distinguished  official  expert  more  than  once  declared  that  the  ambi- 
tion of  the  Department  was  to  lay  on  the  telephone  like  gas  and  water  into  every  house,  and  that  this 
could  not  be  done  unless  the  existing  charges  were  brought  down  by  a  large  amount.  Instead  of  this, 
we  have  the  Secretary  to  the  Post  Office,  one  of  the  most  progressive  and  enterprising  officials  in  the 
service,  telling  us  that  he  does  not  anticipate  any  immediate  increase  of  rates,  but  that  "it  will  be  almost 
impossible  to  have  a  permanent  rate  for  telephone  service,  and  rates  will  have  to  be  reviewed  from  time 
to  time."  Furthermore:  "The  authorities  are  not  very  sanguine  that  much  of  a  reduction  in  the 
rates  will  be  possible."  This  certainly  is  not  what  the  public  expected  when  the  Government  took  over 
the  service.     It  was  felt  that  charges  which  enabled  the  old  company  to  pay  a  good  dividend,  and  a 

45 


very  big  royalty  to  the  State,  ought  to  be  capable  of  reduction  under  Government  administration  when 
those  items  were  abolished. 

From  an  article  entitled  "Public  Ownership  in  France,"  by  Paul  Leroy-Beaulieu,  in  the  North 
American  Revietv,  March,  1913. 

It  is  not  superfluous  to  say  here  a  few  words  about  one  of  the  more  recent  French  State  monop- 
olies— the  telephone.  The  complaints  under  this  head  are  universal.  In  the  first  place,  the  tariff  is 
very  high — 400  francs,  or  nearly  $80  a  year  in  Paris,  the  aim  of  the  State  being  to  get  out  of  it  as 
much  as  possible — 40,000,000  francs  gross. 

Winnipeg,   Manitoba,   Tribune,  December  29,  1911: 

The  Tribune  learned  this  afternoon  that  strong  and  probably  effective  pressure  of  a  party  polit- 
ical nature  is  being  brought  to  bear  on  the  Local  Government  to  suspend  the  proposed  new  telephone 
schedule,  and  substitute  one  that  will  be  within  a  measure  of  reason.  *  *  *  At  any  rate,  the 
Tribune  is  assured  that  the  new  rates  will  not  prevail,  for  the  simple  reason  that  the  public  will  not 
stand   for  them.     *     *     * 

Winnipeg,  Manitoba,  Free  Press,  December  28,  1911: 

.\t  the  annual  meeting  of  the  Winnipeg  Builders'  Exchange  last  night  the  following  resolution 
was  passed  unanimously : 

"Resolved,  that  the  Winnipeg  Builders'  Exchange,  at  this  annual  meeting,  do  hereby  emphat- 
ically protest  against  the  proposed  increase  in  the  schedule  of  telephone  rates  in  this  city,  believing 
the  same  to  be  excessive  and  unjust,  and  further  affirms  that  in  its  opinion  no  increase  in  the  rates 
should  be  proposed  until  a  full  statement  in  detail  of  the  cost  of  the  system,  and  of  operating  the  same, 
has  been  placed  before  the  people,  who  are  the  owners  of  the  property,  and  that  such  statement  should 
show  the  cost  and  the  expense  of  operating  that  portion  within  the  city  of  Winnipeg,  and  the  revenue 
derived  therefrom." 

Winnipeg,  Manitoba,  Free  Press,  December  22,  1911: 

The  medical  men  say  they  are  out  to  beat  the  proposals  of  the  government  in  the  matter  of 
telephone  rates.  One  of  their  number  states  that  a  meeting  of  the  practitioners  in  the  city  will  be 
held  at  an  early  date,  and  the  whole  matter  brought  up  for  consideration  and  action. 

Winnipeg,  Manitoba,  Free  Press,  December  20,  1911: 

The  storm  of  protest  against  the  Manitoba  Government  telephone  new  rates  is  now  taking 
more  material  form,  and  the  various  bodies  of  business  men  who  are  organized  in  the  city  are  taking 
the  matter  up  in  public,  and  moving  in  the  direction  of  having  the  rates  repealed. 

At  the  same  time  the  protests  continue  from  every  quarter  of  the  city  and  the  province. 
Every  shade  of  political  opinion  and  every  class  of  society  is  represented  by  the  subscribers,  who 
feel  that  the  new  rates  are  an  injustice  to  those  who  have  patronized  the  telephone  system  for  so  long. 

Winnipeg,  Manitoba,  Free  Press,  December  14,  1911: 

Many  have  said  that  under  the  new  schedule  they  will  have  to  do  without  the  'phone.  Others 
have  suggested  a  boycott.  One  prominent  man  of  business  says  that  the  subscribers  in  the  city 
should  band  together  and  abolish  the  'phone,  thus  meeting  the  authorities  on  their  own  ground.  They 
have  not  been  consulted  regarding  the  change,  and  it  is  simply  outrageous.  Another  says,  "The  post- 
card is  cheaper  and  will  serve  my  purpose  as  well." 

And  not  only  is  the  denunciation  of  the  rates  confined  to  the  small  householders  or  the  small 
business  men  of  the  city.  The  leading  men  of  the  city  are  out  against  the  proposed  rates.  The 
Board  of  Trade  will  take  the  matter  up  at  its  next  meeting.  It  will  be  considered  by  the  Builders' 
Exchange,  and  a  committee  of  the  Industrial  Bureau  has  been  appointed  to  take  the  matter  up.  It 
is  not,  therefore,  the  cry  of  one  single  class  or  section  of  the  community  that  is  heard,  but  the  uni- 
versal voice  of  the  community. 

46 


Winnipeg,  Manitoba,  Free  Press,  December  14,  191 1 : 

Yesterday  the  Manitoba  Telephone  Commission  issued  a  statement  of  the  new  telephone  rates. 
*  *  ♦  The  new  schedule  which  is  announced  makes  a  number  of  changes  which  are  of  importance 
and  the  cost  of  the  telephone  in  the  house  and  the  ofhce  will  be  materially  increased. 

A  number  of  business  men  in  the  city  who  had  gone  into  the  rates  as  announced  are  strong  in 
the  condemnation  of  them,  and  say  that  many  of  their  customers  will  as  a  result  of  the  changes 
dispense  with  the  telephone,  and  as  a  consequence  business  will  suffer  greatly.  A  storm  of  protest  has 
come  from  private  telephone  users  all  over  the  city. 

Zeitschrift  fiir  Schwachstromtechnik.  Munich,  Germany,  October,  1911,  No.  20: 
The  Guild  of  Trade  Agents  in  Prague  has  begim  energetic  agitation  against  the  increases  in 
the  telephone  rates  which  are  to  take  effect  in  Prague  on  January  1st  of  next  year.    A  petition,  with 
reasons  fully  explained,  will  be  presented  shortly  by  this  Guild  to  the  Minister  of   Commerce  at 
Vienna. 

Blatter  fiir  Post  und  Telegraphic,  Berlin,  Germany,  October  15,  1911  (translation) : 
The  new  Telephone  Rate  Law,  which  according  to  the  plan  of  the  Government  was  to  have 
gone  into  effect  on  April  1,  1911,  is  at  the  present  moment  still  being  discussed  in  committee — a  proof 
of  what  vast  importance  the  proposal  must  be  for  almost  everyone,  and  an  evidence  of  the  widely  varied 
convictions  of  the  different  parties  in  the  Reichstag.  The  proposed  law  received — almost  without 
exception — an  unfavorable  reception  in  the  daily  press;  however,  it  must  be  noted  that  only  the 
sentiments  of  those  received  expression  who — rightly  or  wrongly — thought  their  own  rates  would  be 
increased,  so  that  the  public  press  cannot  be  considered  as  the  true  reflection  of  public  opinion. 

Elecktrotechnische  Zeitschrift,  Berlin,  Germany,  February  9,  1911   (translation): 
During  the  first  meeting  of  the  Executive  Committee  of  the  Berlin  Trade  and  Industrial  Asso- 
ciation, Januan,-,  1911,  the  new  telephone  rates  were  discussed,  and  after  deliberation   the   members 
voted  to  oppose  the  Government's  proposition.     According  to  the  views  of  the  Committee,  these 
rates  do  not  meet  the  wants  of  commerce  and  industry. 

Statement  by  Leon  Gerard  before  the  Chamber  of  Commerce,  Brussels,  Belgium,  published 
in  the  Bulletin  of  the  Chamber,  January  15,  1911  (translation) : 

We  have  learned  that  the  government  has  planned  to  modify  telephone  subscription  rates.  The 
plan  which  it  proposes  to  adopt  has  caused  great  protest,  and  we  have  thought  it  necessary  to  call  at 
once  a  meeting  of  the  Executive  Committee,  in  order  to  deliberate  without  delay  upon  this  question. 


For  several  years,  Belgium's  trade  and  commerce  have  raised  complaints  both  about  the  organi- 
zation of  the  telephone  service  and  about  the  height  of  the  telephone  rates.  These  complaints,  set 
aside  for  a  long  time  by  every  possible  dilatory  means,  have  finally  succeeded  in  causing  the  admin- 
istration to  elaborate  a  new  tariff  schedule. 

The  first  glance  at  this  tariff  schedule  has  been  sufficient,  because  of  the  rate  increases  which  it 
necessitates,  to  cause  outcries  of  public  opinion. 

Elecktrotechnische  Zeitschrift,  Berlin,  Germany,  January  5,  1911  (translation)  : 
With  regard  to  the  attacks  which  the  new  rate  schedule  of  the  Administration  has  occasioned 
in  trade  circles,  the  matter  has  been  submitted  to  expert  opinion  by  the  Board  of  Trade  in  addition  to 
the  Chamber  of  Commerce  of  X'ienna.  At  the  recent  meeting  representatives  of  the  Government 
were  also  present.  The  management  of  the  entire  telephone  system  was  discussed,  and  it  was  urged 
that   operation   be   carried   on   on   a   more   commercial   basis   than    formerly.     *     *     ♦ 

*  *  *  The  meeting  reached  the  decision  that  the  De[)artment  of  Commerce  be  requested 
to  remodel  the  rate  schedule  and  in  doing  so  to  have  regard  to  the  points  recommended  by  the  Board 
of  Trade. 

47 


The  Frankfurter  Zeitung,  Frankfort,  Germany,  June  2,  1909  (translation)  : 
At  the  end  of  1907  a  committee  of  representatives  of  the  three  German  Postal  Administrations 
met  and  agreed  on  a  bill  for  the  new  regulation  of  the  German  telephone  rates — apparently  on  the 
proposal  of  the  Bavarian  Government.  This  bill,  in  January,  1908,  was  placed  before  a  committee 
of  the  different  circles  interested,  called  together  y  the  German  Post  Office,  and,  after  lengthy  con- 
sideration, was  practically  declared  to  be  acceptable.  But  when  the  bill  with  the  supplementary  memo- 
randum was  made  public,  general  opposition  arose  and  fifteen  months  of  most  vigorous  discussion 
followed.  On  the  10th  of  February,  1909,  the  bill  and  memorandum  were  placed  unaltered  before 
the  German   Reichstag,  and  at  the  present  time  the  bill  is  resting  in  Committee. 

It  will  be  seen  that  the  injustices  of  the  proposed  tariff  are  quite  of  the  magnitude  of  those 
of  the  existing  tariff. 

(Note. — Agitation  for  a  revision  of  rates  began  in  1906.  The  Government  immediately  rec- 
ognized the  need  for  a  general  rate  revision,  and  has  since  then  been  planning  the  revision.  Latest 
advices  show  that  no  action  has  as  yet  been  secured  during  the  eight  years  of  rate  planning.) 

(American — Editorial) 

From  "Alaska — An  Empire  in  the  Making"  (1913,  Chapter  XVI,  pages  205-7),  by  John  J. 
Underwood.  (The  information  contained  in  this  book  was  gathered  during  an  almost  continuous  resi- 
dence of  fourteen  years  in  Alaska  and  the  Yukon  Territory)  : 

There  is  at  present  one  good  example  of  government  ownership  in  Alaska  in  the  telegraph  sys- 
tem of  the  Territory,  which  is  owned  and  operated  exclusively  by  the  government  under  the  direction 
of  the  Department  of  War.  The  tolls  charged  on  this  system  are  such  as  would  force  a  private  cor- 
poration to  keep  a  hydrant  playing  on  its  stock  books  to  keep  down  the  dividends  to  a  point  where 
they  would  not  create  a  public  scandal. 

Mile  for  mile  the  government  charges  at  least  280  per  cent,  more  for  service  in  Alaska  than 
does  cither  of  the  large  companies  operating  in  the  United  States. 

The  rate  charged  for  a  message  of  ten  words  from  Seattle  to  Nome,  a  distance  of  2,340  miles 
by  steamship  course  and  2,879  miles  by  the  telegraph  and  cable  route,  is  $3.80  and  thirty-eight  cents 
for  each  extra  word.  The  rate  charged  by  either  of  the  commercial  companies  for  a  ten-word  day 
message  from  Seattle  to  New  York,  a  distance  of  3,000  miles,  is  $1.00,  and  seven  cents  for  each  addi- 
tional word.  The  rate  for  telegraph  and  cable  messages  from  Seattle  to  London  or  Berlin,  a  distance 
more  than  twice  as  great  as  that  from  Seattle  to  Nome,  is  $2.90.  Messages  between  points  in  the 
United  States  are  transmitted  on  about  an  equal  mileage  basis. 

New  York  Press,  December  22,  1913: 

To  find  the  exact  relationship  between  British  and  American  charges  for  telephone  service  will 
require  scientific  investigation  into  all  those  conditions,  with  technical  adjustments  to  make  true  com- 
parisons and  expert  measurements  of  what  really  comes  out  as  service  for  what  really  goes  in  as  cost. 
Meanwhile,  we  do  know  positively  that,  whatever  the  actual  cost  comparison,  we  have  something  over 
here  worth,  in  what  it  does  for  us,  a  very  great  deal  more  than  the  British  service  is  worth. 

As  for  the  French  telephone  service,  it  is  both  poor  and  dear.  It  is  so  wretchedly  poor  that 
nobody  in  Paris,  for  example,  will  have  a  telephone  in  the  house  if  he  can  possibly  do  without  it.  It 
is  both  so  low  in  efficiency  and  high  in  cost — for  what  is  done — that  Paris  doesn't  make  the  relative 
telephone  showing  of  an  ordinary  American  village.  Technical  measurements  of  those  facts  also 
must  be  forthcoming  before  any  final  judgment  of  the  true  balance  will  be  reached. 


48 


EXPENSE 
{Foreign — Official) 

From  the  Report  of  the  British  Postmaster-General  for  the  year  1912-13,  p.  34.  No  allowance 
has  been  made  for :  (a)  Interest  on  capital  invested  since  September  30,  1873 ;  (b)  Depreciation ; 
(c)  Interest  on  accumulated  deficits.  "No  rent  is  charged  in  respect  of  premises  owned  by  the 
Postmaster-General  and  used   for  the  purposes  of   Telegraph  business." — Official  Report. 

Telegr.\phs. — The  telegraph  revenue  of  the  year,  including  the  value  of  services  rendered 
to  other  Departments,  was  £3,167,410,  an  increase  of  £19,705;  and  the  telegraph  expenditure,  includ- 
ing the  interest  on  the  capital — £10,867,644 — expended  on  the  purchase  of  the  telegraphs,  was  £4,124,- 
976,  a  decrease  of  £309,897  upon  the  previous  year.  The  net  deficit  was  thus  £957,566,  or  £329,602 
less  than  last  year. 

Financial  results  of  the  combined  telegraph  and  telephone  toll  service  in  New  Zealand,  for  the 
year  ended  March  31,  1913,  as  published  in  the  Official  Report  of  the  Post  and  Telegraph  Depart- 
ment: 

£  $ 

Gross  Telegraph  and  Telephone  Toll  Revenue  (including  Miscellaneous  Rev- 
enue)          321,951       1,564,682 

Value  of  Government  Messages  4,931  23,965 

Total  Value  of  Telegraph  and  Telephone  Toll  Business 326,882       1,588,647 

Total  Telegraph  and  Telephone  Toll  Expenditure  (excluding  interest  charges)       388,464       1,887,935 
Official  Net  Profit  (excluding  interest  charges)  of  the  Combined  Telegraph  and 

Telephone  Toll  Services  —61,582     —299,288 

From  telegraph  statistics  for  Spain,  for  1911,  published  in  Le  Journal  Telegraphiquc,  Berne, 
Switzerland  (official  organ  of  the  International  Bureau  of  the  Telegraph  Union),  May  25,  1913  (trans- 
lation) : 

Total  receipts  Fr.    10,622,159     ($2,124,432) 

"      expenses Fr.    12,153,718     ($2,430,743) 

Deficit Fr.      1,531,559     ($    306,311) 

From  telegraph  statistics  for  the  Union  of  South  Africa,  for  1911,  published  in  Le  Journal 
Telegraphiquc,  Berne,  Switzerland  (official  organ  of  the  International  Bureau  of  the  Telegraph  Union), 
May  25,  1913.     (Telegraphs  in  the  Union  of  South  Africa  are  State  owned) : 

Total  receipts   Fr.   8,271,900     ($1,654,380) 

"      expenses Fr.    9,530,588     ($1,906,118) 

Deficit Fr.    1,258,688     ($   251,738) 

From  the  Official  Report  of  the  Minister  of  Public  Instruction,  Post  and  Telegraphs,  Ecuador, 
for  the  year  1911-1912,  p.  26  (translation)  : 

To  be  perfectly  candid,  I  can  do  no  less  than  state  in  this  report  that  the  accounting  of  the 
telegraph  branch  still  suffers  from  "routine-ism"  and  really  woeful  inefficiency.  And  without  proper 
accounting,  it  is  difficult  to  exercise  any  control,  or  to  make  just  criticism.  The  result  is,  that  in  a 
service  whose  income  should  suffice  to  meet  its  needs  and  to  yield  an  assured  profit  to  the  exchequer, 
there  occurs,  year  after  year,  a  greater  and  greater  deficit,  as  can  be  proved  by  simply  making  a 
comparative  analysis  of  figures  and  dates. 

49 


Limiting  myself  to  the  year  with  which  this    report  is  concerned,  the  financial  standing  of  the 
telegraphs  for  the  last  six  months  of  1911  was,  approximately,  as  follows: 

Receipts   SI.  169,586.62     ($  82,588.68) 

Expenditures SI.  230,486.17     ($112,246.76) 

Deficit SI.    60,899.55     ($  29,658.08) 

In  the  first  six  months  of  this  year  the  revenue  and  expenditures  were  as  follows: 

Receipts   SI.  139,804.63     ($  68,084.85) 

Expenditures SI.  221 ,650.28     ($107,943.68) 


Deficit SI.    81,845.65     ($39,858.83) 

Financial  results  of  the  combined  telegraph  and  telephone  toll  service  in  New  Zealand,  1907-08 
to  1911-12,  inclusive,  as  published  in  the  Official  Reports  of  the  Post  and  Telegraph  Department: 


Year 
ended 
March  31 

Grow  Tele- 
graph and 
.    Telephone 
Toll  Revenue 
(incL  Miscellan- 
eous Revenue.) 

i 

Value  of 

Government 

Messages. 

Total  Value 
of  Telegraph 
and  Telephone 
Toll  Business. 

£ 

Total  TelcEraph 
and  Telephone 
Toll  Expenditure, 
including  charges. 

£ 

Official 
interest 
bined 
phone 

£ 

Net  Profit   (excluding 
charges)  of  the  Com- 
Telegraph   and    Tele- 
ToU  Services. 

$ 

1908.... 

227,398 

4,499 

231,897 

275,757 

—43,860 

—213,160 

1909.... 

238.104 

4,821 

242,925 

307,166 

—64,241 

—312,211 

1910.... 

250,212 

4,851 

255,063 

322,485 

—67,422 

—327,671 

1911.... 

272,943 

4,874 

277,817 

344,046 

—66,229 

—321,873 

1912.... 

295,334 

4,832 
23,877 

300,166 

364,613 

— 6+,447 

—313,212 

Totals 

1,283,991 

1,307,868 

1,614,067 

—306,199 

—1,488,127 

Statement  of  Herr  Reiiihold  Kraetke  (Postmaster-General  of  the  German  Imperial  Postal  Ser- 
vice, including  the  Telegraph  and  Telephone  services)  made  in  the  course  of  a  debate  in  the  Reich- 
stag on  March  27,  1912  (published  in  the  Deutsche  Verkehrsceittmg,  April  5,  1912)  : 

The  gentlemen  know  that  the  Telegraph  Administration  is  run  at  a  very  heavy  loss. 

From  the  Report  on  the  French  Budget  for  Posts  and  Telegraphs,  1911,  by  M.  Emile  Dupont, 
Senator,  Senate  Document  No.  189,  p.  117  (translation): 

The  consequence  is  that,  taking  everything  into  account,  the  operation  of  the  telegraphs  results 
in  a  deficit.  ♦  *  *  In  his  Supplementary  Report  on  the  Budget  for  Posts  and  Telegraphs  for 
1905,  Hon.  M.  Sembat  tried  to  draw  up  a  balance  sheet  for  the  three  great  branches  of  the  service. 
With  definite  reservations,  he  indicates  a  deficit  of  9,777,000  fr.  ($1,886,961)  for  the  telegraphs. 

From  the  Official  Report  of  the  Postmaster-General  of  the  Union  of  South  Africa  (Department 
of  Posts  and  Telegraphs),  for  the  year  1911  (p.  12)  : 

After  debiting  the  telegraph  account  witli  all  direct  charges  incurred  and  a  proportionate  share 
of  the  cost  of  administration  and  other  general  expenditure,  and,  on  the  credit  side,  including  the 
value  of  work  undertaken  free  of  charge  for  other  Government  Departments  and  of  the  concession 
represented  by  the  reduced  rates  to  the  Railway,  it  is  found  that  the  working  of  the  Telegraphs  of  the 
Union  resulted  in  a  deficit  for  the  year  of  over  £60,000. 

From  the  Report  of  the  Postmaster-General  of  the  Union  of  South  Africa,  for  the  year  1910: 

Although  every  effort  has  been  made  to  reduce  expenditure,   there   is   little  prospect   of   the 

Telegraph  Department  paying  its  way.     The  Reports  of  all  the   Provinces   prior  to   Union   showed 

losses  in  working,  the  amount  in  the  Cape  Colony  and  Transvaal  being  at  the  rate  of  £37,000  and 

£34,052  per  annum  respectively. 

50 


The  general  position  of  the  Telephone  Account  of  the  Union  for  the  calendar  year  1910,  was: 

Capital  Expenditure £893,239 

Revenue,  1910 167,271 

Expenditure,   1910,  including  interest  and  depreciation 189,049 

Deficit 21,778 

From  the  Annual  Report  on  the  Postal,  Telegraph  and  Telephone  Service  of  The  Netherlands 
for  the  year  1910: 

Total  Telegraph  Revenue Fl.  2,543,679  ($1,017,472) 

Total  Telegraph  Expenditure Fl.  4,180,227  ($1,672,091) 

Deficit Fl.  1,636,548  ($   654,619) 

From  the  Report  of  the  Royal  Commission  Appointed  to  Investigate  the  Postal,  Telegraph  and 
Telephone  Services  of  the  Commonwealth  of  Australia  (ordered  to  be  printed  October  5,  1910)  : 

Accepting  the  most  liberal  reading  *  *  *  the  estimated  loss  on  the  transactions  of  the  Depart- 
ment from  the  inception  of  the  Commonwealth  to  30th  June,  1909,  amounted  to  at  least  £2,300,000. 

The  information  furnished  would  make  it  appear  certain  that  the  postal  section  of  the  Depart- 
ment returns  a  profit  as  a  whole  but  the  extent  of  such  profit  was  not  ascertainable.   *   *    * 

Your  Commissioners  therefore  conclude  that  the  Department's  unsound  financial  position  is 
due  to  the  fact  that  telegraphic  and  telephonic  services  are  rendered  at  rates  which  do  not  return  rev- 
enue sufficient  to  cover  all  charges  against  capital  account,  and  working  expenses. 

From  report  of  a  speech  of  Representative  Dr.  Paasche  in  the  German  Reichstag,  February 
15,  1901,  as  given  in  the  Arcliiv  fiir  Post  und  Telegraphic  (an  oflficial  publication),  for  April,  1901 
(translation) : 

In  accordance  with  information  furnished  by  the  Secretary  of  State  of  the  Imperial  Post  Office, 
an  attempt  has  been  made  to  estimate  the  financial  result  of  some  branches  of  the  Postal  Administra- 
tion, by  applying  ordinary  commercial  principles.  Using  correct  rates  for  depreciation,  and  a  proper 
interest  upon  the  capital  invested  in  the  telegraph,  it  appears  that  this  service  requires  annually  a  con- 
tribution of  15,000,000  marks,  being,  therefore,  a  losing  business. 

From  a  speech  delivered  at  Tourcoing,  France,  Xovember  17,  1913,  by  the  Marquis  de  Monte- 
bello.  President  of  the  Association  of  Telephone  Subscribers,  printed  in  the  Bulletin  des  Abonnes  an 
Telephone  (Bulletin  of  the  Telephone  Subscribers'  Association),  Paris,  France,  December,  1913 
(translation) : 

The  State  in  France  has  not  even  a  proper  accounting  system  for  the  telephone.  It  does  not 
know  whether  the  telephone  yields  a  profit  or  whether  there  is  a  loss.  A  senator  has  calculated  that 
the  State  probably  loses  about  eight  millions  each  year. 

(Foreign — Editorial) 

Telegraph  and  Telephone  Age,  New  York,  February  16,  1912,  page  121,  quoting  from  the 
London  Spectator,  in  regard  to  the  British  telegraph  service: 

When  all  these  facts  are  taken  into  account — namely,  the  original  capital  which  has  never  been 
repaid,  the  advances  from  Parliament  upon  which  no  interest  is  charged,  and  the  annual  deficiencies 
on  working  expenses — it  will  be  found  that  the  aggregate  commercial  loss  to  the  country  by  the  state 
purchase  of  the  telegraphs  is  not  less  than  $175,000,000.  Nor  can  we  console  ourselves  with  the  re- 
flection that  for  this  $175,000,000  tlie  state  has  a  valuable  asset,  for  that  asset,  such  as  it  is.  involves 
every  year  on  its  working  an  additional  loss  of  over  $5,000,000.  From  a  commercial  point  of  view 
the  purchase  has  been  an  unmitigated  failure. 

51 


Boston,  Mass.,  Transcript,  December  22,  1913:  , 

It  is  to  be  hoped  that  such  gayety  will  not  become  contagious,  for  if  it  does  there  is  no  saying 
how  soon  we  shall  be  imitating  the  example  of  Australia,  which  in  its  zeal  for  public  ownership  has 
accumulated  a  bonded  debt  fully  fifty  per  cent  greater  than  the  United  States.  This  may  seem  a  start- 
ling statement  to  make  with  regard  to  a  commonwealth  which  has  less  than  5,000,000  inhabitants,  but 
figures  bear  it  out.  The  total  public  debt  of  the  States  composing  the  Commonwealth  of  Australia 
was:  June  30,  1912,  about  $3,365,000,000,  or,  deducting  the  sinking  fund,  $1,335,000,000.  This  was 
accumulated  through  government  ownership,  and  represents  bond  issues  for  the  State  railroads  and 
State  proprietorship  of  public  utilities  generally.  The  railroads,  all  of  which  are  State  owned,  cost  for 
construction  and  equipment  $766,000,000,  though  they  have  a  mileage  of  but  16,078  in  operation.  Their 
gross  receipts  are  about  $89,000,000  a  year,  their  operating  expenses  about  $56,000,000.  Inasmuch  as 
the  population  of  the  United  States  is  about  twenty  times  that  of  Australia  and  our  railroads  have 
250,000  mileage,  it  will  not  require  a  very  elaborate  calculation  to  reach  what  would  be  the  cost  if  we 
should  imitate  Australia. 

Providence,  R.  I.,  Journal,  December  15,  1913: 

The  assumption  of  Senator  Hoke  Smith,  of  Georgia,  that  "the  profits  will  ultimately  pay  back 
the  original  cost,"  is  not  warranted  by  the  experiences  of  other  countries  with  the  telegraph  and  tele- 
phone. In  1869  the  British  Parliament  thought  that  in  fifteen  years  the  profits  of  the  telegraph  would 
wipe  out  the  cost  and  that  large  sums  would  be  available  from  them  for  "the  relief  of  taxes." 

The  companies  were  paying  6%  dividend,  which  disappeared  when  the  government  took  the 
properties.  In  two  years  losses  were  reported  and  the  deficit,  according  to  the  report  of  the  Post- 
master-General, now  exceeds  $4,500,000  annually.  And  this  does  not  include  the  loss  of  interest  on 
the  original  investment  and  on  the  money  put  into  extensions,  which,  it  is  estimated,  brings  the  total 
loss  up  to  $6,000,000  a  year. 

There  was  a  like  experience  when  the  Government  acquired  the  telephone,  the  result  has  been 
that  the  service  has  deteriorated  ;  that  no  profit  is  shown  and  that  the  Government  employes  are  most 
arbitrary  in  their  demands.  As  these  employes  have  votes  they  are  in  a  position  to  obtain  concessions 
from  the  Government  which  are  not  justified  on  business  principles.  Presumably  the  American  labor 
unions  would  not  overlook  the  opportunities  offered  by  political  control  of  the  long  distance  telephone 
field,  and  under  their  domination  neither  cost  of  operation  nor  standards  of  efficiency  would  be  con- 
sidered. 

(American — Official) 

Statement  by  George  French,  author  and  editor,  in  a  letter  to  the  New  York  Times,  dated 
October  10,  1913,  and  published  October  13,  1913: 

It  happened  a  few  years  ago,  during  the  reign  of  Roosevelt,  that  I  was  commissioned  to  ex- 
amine the  Government  Printing  Office,  as  an  expert  in  printing  and  economics.  The  work  was  done 
for  a  Senate  committee  that  was  then  looking  into  expenditures.  About  the  first  thing  that  happened 
to  me  was  symptomatic  of  the  Washington  atmosphere.  I  asked  an  attendant  in  one  of  the  Senate 
offices  for  a  glass  of  water.  The  man  looked  at  me  with  surprise  written  all  over  his  face.  Recover- 
ing himself,  he  said,  "Water?  Why  do  you  wish  to  drink  water?  Look  here."  Then  he  showed  me 
a  closet  full  of  all  kinds  of  mineral  waters,  beer,  and  sundry  other  beverages,  in  distinguished  looking 
bottles.  "The  Government  pays  for  it.  Drink  whatever  you  like,  and  if  your  special  drink  is  not 
there  I  will  send  out  and  get  it."  It  was  not  easy  to  get  cool  water  in  the  building — just  plain  water. 
It  was  too  inexpensive.     .'\nd  the  Government  pays  for  something  better,  or  at  least  more  costly. 

From  Report  of  W.  S.  Bissell,  Postmaster-General  of  the  United  States,  year  1894,  pp.  48-^9: 
It  would  seem  that  a  comparatively  small  country,  territorially,  like  Great  Britain,  with  its  large 
population,   great   commercial    interests,   and   tlistrihution  of  cities,  would  furnish  as  favorable  condi- 
tions for  the  operation  of  a  successful  governmental  telegraph  system  as  any  in  the  world;  yet  the 
report  of  the  British  Post  Office  Department  to  the  House  of  Commons,  dated  November  27,  1893, 

52 


shows  the  cost  of  the  plant,  up  to  the  end  of  the  fiscal  year  1893.  to  have  been  $52,930,388.  Interest 
upon  this  amount,  at  the  rate  of  2y^^c  per  annum,  is  charged  in  the  current  account  anil  amounts  to 
$1,455,584. 

In  the  operation  of  the  service  there  was  a  further  loss  of  $811,741,  so  that  the  total  deficit 
for  the  year  amounted  to  $2,267,325.  The  deficiencies  have  been  continuous  since  1876,  and  have 
agg''cgated,  since  1872,  $24,005,432,  and  in  the  last  ten  years  the  average  deficiency  has  been  nearly 
$1,700,000.  In  Great  Britain  the  postal  service  proper  yields  a  large  revenue  to  the  Government,  and 
so,  in  one  sense,  it  can  be  said  that  it  can  afford  the  luxury  of  a  postal  telegraph.  Under  our  postal 
system,  however,  partly  undeveloped  as  it  still  remains,  a  telegraph  system  would  be  operated  at  a 
great  loss  to  the  Government :  and  this  burden,  it  seems  to  me,  should  not  be  added  to  the  Post  Office 
Department. 

If  the  establishment  of  a  telegraph  plant  in  a  compact  country  like  Great  Britain  would  cost 
over  $52,000,000,  what  would  be  the  cost  of  establishing  a  plant  for  this  country?  I  will  not  stop  to 
make  a  computation,  but  one  can  see  at  a  glance  that  the  cost  would  be  many  times  that  of  the  British 
plant,  and  the  annual  interest  charged  many  time.*  $1,455,584;  and  if  the  loss  in  operation  were  over 
$800,000  in  that  country  in  one  year,  I  should  think  it  would  be  many  millions  of  dollars  in  a  country 
the  size  of  ours,  with  its  unequal  distribution  of  population. 

Report  by  Raymond  B.  Fosdick,  Commissioner  of  Accounts,  in  the  matter  of  the  Investigation 
of  the  Accounts  of  the  Municipal  ferries  operated  by  the  Department  of  Docks  and  Ferries,  City  of 
Xew  York : 

"Our  examination  shows  that  the  net  loss  to  the  city  from  operation  of  the  municipal  ferries 
for  the  six  years  and  sixty-seven  days  beginning  October  25,  1905,  and  ending  December  31,  1911,  has 
been  $6,625,606.86,  or  an  average  of  $2,934.93  per  day." 

(American — Editorial) 

New  York  Times  Annalist,  December  29,  1913: 

The  unanimity  with  which  those  who  would  socialize  the  railroads  and  the  telephones,  and 
what  not  else,  hit  upon  3%  as  the  probable  cost  of  capital  to  the  government,  is  extraordinary.  Pos- 
sibly it  is  necessary  to  make  it  3%  for  the  sake  of  getting  a  profit  at  the  end.  Mr.  Lewis  reckons  that 
the  telephones  would  cost  only  $900,000,000.  He  would  a  little  less  than  double  the  national  debt. 
Clifford  Thorne,  to  socialize  the  railways,  would  increase  it  many  fold,  but  always  at  3%.  Among  the 
great  nations  of  the  world  this  one  is  remarkable  for  borrowing  so  little  and  spending  so  much  out  of 
current  income,  and  its  credit  on  that  account  is  high,  but  its  Panama  Canal  3s  have  been  selling  this 
year  under  par.  It  has  barely  a  3%  credit  now.  If  it  embarked  in  the  telephone  and  railway  business 
and  began  to  issue  bonds  to  replace  private  capital,  it  might  not  long  enjoy  a  3%  credit. 

Greeley,  Colorado,  Republican,  December  19,  1913: 

If  the  Government  takes  over  all  of  the  railroads  and  telephone  and  telegraph  lines  it  must  pay 
an  enormous  sum  for  them.  And  when  the  Government  has  possession,  where  will  the  taxes  come 
from?  From  the  home  and  farm  owners.  Government  certainly  will  not  confiscate  these  properties 
and  some  means  must  be  found  of  raising  the  revenue  which  these  concerns  now  pay. 

New  York  Financial  World,  October  25,  1913: 

We  may  be  old  fashioned,  and  a  set  of  old  fogies,  but  one  little  question  arises  which,  we  will 
probably  be  told  by  the  uplifters  and  social  and  moral  tone  elevators,  amounts  to  nothing.  Neverthe- 
less we  will  ask  it:  whence  is  to  come  the  $1,000,000,000  needed  to  buy  up  both  systems  of  telegraph 
and  telephone  and  the  hundred  and  one  independent  concerns  scattered  all  over  the  country  from 
Yuba  Dam  to  Passamaquoddy  Bay?  And  again,  if  we  are  to  goverimientalize  the  telephone  and  tele- 
graph, why  not  include  the  very  necessary  cable  sy.stems  running  to  all  parts  of  the  world?  It  would 
only  involve  an  extra  $100,000,000  or  so  to  take  in  the  cable  systems  and,  don't  you  see,  we  could  have 

53 


free  cable  tolls  for  outgoing  business  and  charge  all  the  expense  to  the  foreigner  who  sends  us  mes- 
sages ? 

Cleveland,  Ohio,  Finance,  October  11,  1913: 

In  the  countless  investigations  and  appraisals  of  telephone  property  in  different  parts  of  the 
countrj',  there  has  been  a  striking  degree  of  uniformity  in  the  values  found  in  excess  of  those  car- 
ried on  the  telephone  books.  In  Boston,  for  instance,  the  existing  plant  could  not  be  duplicated  for 
35%  more  than  its  present  book  value,  according  to  commission  report.  To  duplicate  the  telephone  in 
New  York  City  alone  would  cost  one  hundred  million  dollars  more  than  its  present  book  value,  and  so 
on  among  the  great  cities  of  the  country. 

The  assumption  of  the  Bell  system  by  the  Government  would  easily  involve  a  billion  of  money 
and  that  is  a  large  sum  even  for  a  radical  Democratic  Congress  to  swallow.  Incidentally,  there  is  the 
question  to  be  considered  as  to  whether  the  public  would  not  prefer  the  existing  status. 


MISMANAGEMENT 
(Foreign — Official) 

British  Parliamentary  Debates,  Official  Report,  April  24,  1913,  p.  606: 

Mr.  Harry  Lawson  :  *  *  *  I  do  not  believe  that  any  Member  of  this  Committee  can  have 
read  the  history  of  the  telephone  here,  as  set  forth  in  the  different  Reports  made  by  Select  Commit- 
tees, without  thinking  that  in  many  ways  it  is  a  discredit.  It  is  to  a  large  extent  a  case  of  meddle  and 
muddle  on  the  part  of  the  State,  which  never  allowed  private  enterprise  free  play,  and  yet  was  very 
slow  to  accept  any  general  responsibility. 

*    *    *    We  are  behind  all  the  progressive  countries  of  the  world  in  our  telephone  service. 

From  interview  with  ^I.  Jules  Roche  (French  Minister  of  Posts  in  1890),  member  of  French 
Parliamentary  Post  Office  Committee,  as  published  in  the  Bulletin  de  I' Association  des  Abonnes  au 
Telephone  (Paris,  France),  for  December,  1912  (translation)  : 

A.  It  is  unbelievable,  but  nevertheless  true,  that  the  Post  Office  Administration  does  not  know 
just  how  much  revenue  the  telephone  service  brings  in.  Some  say  30  million  (francs),  others  say 
much  less  than  that,  and  still  others  believe  that  it  costs  more  than  it  brings  in.  *  *  *  But  the  State 
has  a  poor  head  for  business ;  it  knows  neither  how  to  buy,  nor  how  to  sell.  It  conducts  its  business 
very  differently  from  the  man  who  has  put  his  capital  into  some  enterprise  and,  wishing  it  to  prosper, 
does  not  seek  to  delude  himself  about  the  financial  return. 

Q.  Then  you  are  of  the  opinion,  Monsieur  le  Depute,  that  a  State  monopoly  is  not  a  good 
thing  for  the  telephone? 

A.  The  telephone  service  should  be  left  to  private  industrj',  because  the  State  has  to  submit 
to  too  many  influences  other  than  the  needs  of  the  public.  It  is  too  live  and  important  an  undertak- 
ing to  be  ever  fully  developed  by  governmental  sloth.   *   *    * 

Here  is  a  striking  example.  The  administration  cannot  secure  workmen  for  the  construction 
of  its  lines,  unless  it  employs  apprentices,  because  it  does  not  pay  enough.  Skilled  workmen  prefer  to 
find  more  remunerative  employment. 

But  all  this  will  have  to  come  to  an  end.  France  is  a  wonderful  country,  and  our  genius  and 
spirit  of  initiative  must  be  allowed  to  develop.  Some  day  all  this  will  change.  The  State  should  con- 
fine itself  to  governing;  it  has  enough  to  do  if  it  occupies  itself  strictly  with  what  concerns  it,  and 
does  not  seek  to  carry  on  enterprises  which  are  not  within  its  rightful  sphere. 

Report  of  the  Royal  Telephone  Commission  appointed  to  investigate  the  Manitoba  Government 
Telephones  (Winnipeg,  Manitoba,  Telegram,  June  14,  1912)  : 

Our  investigation  has  convinced  us  particularly  of  two  facts,  one,  that  supplies  are  purchased 
very  largely  in  excess  of  requirements;  the  other,  that  excessive  prices  are  paid  therefor  owing  to  lack 

54 


of  competition.  We  feel  that  we  are  amply  justifioti  in  fniding  that  snpplies  are  purchased  before  need 
of  them  has  arisen,  by  the  fact  that  on  the  1st  of  January,  1911,  the  value  of  supplies  on  hand  was 
$585,251.63,  that  during  that  year,  supplies  to  the  amount  of  $1,332,599.82  were  got,  and  that  on  the 
first  of  the  year  1912  the  value  of  supplies  on  hand  was  $609,359.22,  at  least  twice  as  much  as  they 
should  have  been,  and  we  may  remark,  in  passing,  as  indicating  the  lack  of  knowledge  of  the  condi- 
tion of  affairs  in  this  department  by  those  responsible  therefor,  that  before  these  figures  were  given 
to  us,  the  chairman,  in  evidence,  stated  the  supplies  on  hand  would  be  about  $400,000,  and  the  com- 
missioner engineer  said  they  would  be  about  $300,000.  ♦  ♦  *  Before  leaving  the  subject,  and  as 
further  evidence  of  this  extravagance,  we  may  say  that,  notwithstanding  that  completed  work  could 
not  be  done,  20,000  additional  poles  were  purchased  in  1911,  a  small  part  of  which  was  included  in 
the  162,763  poles  said  to  be  on  hand  in  January  of  this  year,  the  balance  delivered  or  to  be  delivered 
after  that,  and  thus  swelling  this  account  beyond  all  bounds.  In  fact,  poles  were  in  hand  at  the  be- 
ginning of  this  year  sufficient  at  40  poles  to  the  mile  to  build  4,069  miles  of  pole  line,  which  is  within 
a  very  little  of  the  total  of  pole  mileage  constructed  in  the  last  four  year?. 

From  Official  Report  by  Senator  Emile  Dupont  on  the  1912  Budget,  Posts  and  Telegraphs, 
French  Senate  Document  No.  35,  Appendix  to  Stenographic  Report  of  session  of  January  30,  1912, 
Pages  190-191  (translation)  : 

Since  the  fusion  of  the  Postal  and  Telegraph  services,  that  is  to  say,  since  1877,  the  Administra- 
tion of  Posts,  Telegraphs  &  Telephones  has  changed  its  organization  six  times. 

First  the  organization  was  under  the  Assistant  Secretarj'  of  State,  which  later  on  was  changed 
into  a  ministry.  In  1887  it  was  changed  to  a  Direction  General,  under  the  head  of  Ministry  of 
Finance.  A  short  time  thereafter  this  Direction  General  was  placed  under  the  supervision  of  the 
Ministry  of  Commerce.  An  Assistant  Secretary  of  State  was  re-established  in  1896.  The  Assistant 
Secretary  of  State  remained  under  the  direction  of  the  Ministry  of  Commerce  until  1896,  when  he  was 
transferred  to  the  Ministry  of  Public  Works.  In  1909  the  position  of  Assistant  Secretary  of  State 
was  abolished  and  the  management  of  the  Postal,  Telegraph  &  Telephone  Services  was  directly  en- 
trusted to  the  care  of  the  Minister  of  Public  Works.  An  Assistant  Secretary  of  State  was  again 
created  in  1910.  As  a  Direction  General  or  an  "Assistant  Secretariat,"  the  Administration  has  been 
attached  to  three  different  Ministries: 

1st.     The  Ministry  of  Finance. 

2nd.     The  Ministry  of  Commc-cc. 

3rd.     The  Ministry  of  Public  Works. 

Such  instability  is  plainly  reflected  in  the  methods  and  programs  of  the  Administration. 

From  the  Report  of  the  Royal  Commission  appointed  to  Investigate  the  Postal,  Telegraph  and 
Telephone  Ser\'ices  of  the  Commonwealth  of  Australia  (ordered  to  be  printed  October  5,  1910) : 
S!«'>"'»!  32.     Your  Commissioners  consider  that  the  Central  Executive  in  neglecting  to 

Executive  ^    ^  CT  r3 

responsible  for  excrcise  Ordinary  foresight  by  making  the  necessary  provision  to  meet  the  demands  of 
the  public  when  the  telephone  rates  were  reduced  in  1907,  and  in  failing  to  profit  by 
the  experience  of  other  countries  in  similar  circumstances,  is  responsible  for  the  con- 
gested state  of  the  telephone  service,  and  the  consequent  overworking  of  the  officers 
of  the  Department.     The  evidence  discloses  that  the  reductions  in  the  telephone  rates 

ReduotioM  were  made  on  the  advice  of  a  subordinate  officer,  and  in  opposition  to  the  advice  of 

opposed   by 

Pemnnent  the  Permanent  Head  and  Chief  Electrical  Engineer,  and  your  Commissioners  consider 

Head    and  ,,..,i-  e  t 

Chief  Eiectricsi         {hat  the  then  Postmaster-General  took  action  without  havnig  any  sound  reason  for  the 

Enisineer. 

drastic  reduction  made. 

**♦*♦*♦***** 

Continuity  40.    In  the  administration  of  the  Commonwealth  Post  and  Telegraph  Department 

of  policy.  ,  .,  ,,.,  .•  ri*  lilt 

it  is  desirable,  in  the  interests  of  the  public,  that  continuity  of  policy  should  be  main- 
tained. The  Central  Executive  attempted  to  formulate  a  definite  policy ;  but  it  was 
alleged  that  a  continuous  policy  could  not  be  exercised  by  the  Department  because  of 
its  incompatibility  with  frequent  changes  of  the  Ministerial  Head.     There  have  been 

55 


nine  Postmasters-General  since  the  inauguration  of  the  Commonwealth,  and  the  evi- 
dence discloses  that  most  of  the  Ministerial  Heads  endeavored  to  effect  signal  altera- 
tions of  policy.  Ministers  are  apparently  anxious  to  signalize  their  occupancy  of 
office  by  some  new  and  distinct  act  of  administration  ;  but  due  regard  does  not  appear 
to  have  been  paid  to  the  effect  of  such  actions. 

DepartnH>nt''not'''''  Dclays  in  the  cxccution  of  administrative  duties  are  also  occasioned  by  the  en- 

to  be  oned  for  forced  abscHce  of  the  Minister  from  his  Department  on  political  business. 

political    purposes.  ^  ^ 

From  the  Report  of  the  Committee  of  Finance,  France,  appointed  by  the  Senate  to  examine  the 
Postal  and  Telegraph  Budget  for  the  year  1910  (translation)  : 

The  failure  to  conduct  the  Postal,  Telegraph  and  Telephone  Service  of  France  upon  commer- 
cial principles  is  the  real  cause  of  the  inefficiency  and  backwardness  of  the  Department.   *   *   * 

For  many  years  the  operating  plant,  especially  the  telephone  apparatus,  has  not  kept  pace  with 
the  progress  of  the  art,  and  local  service  has  been  neglected.    *    *    * 

A  careful  study  of  the  present  budget,  and  of  many  preceding  ones,  proves  that  the  inefficiency 
of  the  service  is  not  due  to  isolated  faults,  but  to  the  continued  use  of  bad  methods  which  must  be 
eradicated. 

From  Official  Report  on  the  French  Budget  for  Posts  and  Telegraphs,  1908,  pages  11-13,  by 
Joseph  Noulens,  then  Member  of  the  French  Chamber  of  Deputies,  now  Minister  of  War  (transla- 
tion) : 

Despite  the  diversity  of  its  operations,  the  Postal,  Telegraph  and  Telephone  Administration  has 
not  known  how,  or  has  not  desired,  to  apply  the  principle  of  specialization  of  work,  of  which  modern 
industry  has  g^ven  examples  and  demonstrated  the  advantages. 

************ 

A  clerk  who  has  sorted  letters  in  an  oflice  for  ten  years  is  appointed  head  clerk  in  the  telegraph 
or  telephone  service;  he  will  be  intrusted  with  the  direction  of  services  which,  up  to  then,  had  been 
totally  strange  to  him ;  his  duty  will  consist  in  supervising  a  staff  of  operators,  though  he  is  ignorant 
of  the  manipulation  of  the  modern  instruments,  and  sometimes  of  all  the  instruments. 

************ 
A  clerk  who  has  been  occupied  for  15  years  in  directing  deliveries  of  mails  or  in  marking  postal 
savings-bank  pass-books  is  promoted  to  the  position  of  inspector  of  the  technical  service,  and  in  this 
capacity  is  charged  with  constructing  lines,  performing  electrical  work,  etc.,  all  things  which  he  has  never 
heard  of  before,  things  he  will  neglect  or  do  badly.  He  will  prefer  to  confine  himself  to  clerical 
work  which  will  be  as  nearly  as  possible  like  the  work  he  was  in  the  habit  of  doing. 

{Foreign — Editorial) 

The  Times,  London,  England,  December  20,  1913: 

Sir, — As  the  treatment  which  I  have  lately  received  from  the  London  Telephone  Service  is  no 
doubt  typical  of  that  meted  out  to  other  unfortunate  subscribers,  my  experience  may  probably  be  of 
interest. 

After  an  unsatisfactory  correspondence  with  reference  to  the  removal  of  an  instrument  from 
a  house  which  I  was  giving  up  I  wrote  the  service  on  October  28  stating  that  I  had  taken  a  new  house 
and  wanted  an  instrument  installed  there  for  use  as  from  December  20.  To  this  I  received  the  usual 
formal  acknowledgment  and  intimation  that  the  matter  would  receive'  "immediate  attention."  Not 
hearing  further  1  wrote  again  on  November  21,  and  again  on  December  2,  without  securing  any  reply 
at  all,  altliough  I  besought  them  in  the  latter  communication  to  tell  me  what  course  I  ought  to  adopt 
to  obtain  a  reply.  Thinking  I  might  manage  to  do  some  good  by  a  personal  request,  I  to-day  rang 
up  the  department  at  102,  Dean-street,  which  was  supposed  to  be  attending  to  the  matter,  and  the 

56 


clerk  to  whom  I  spoke  affected  to  be  deeply  concerned  and  promised  me  faithfully  that  the  whole  cor- 
respondence should  be  looked  into  and  that  I  should  be  mng  up  within  an  hour— and  that  is  all  that 
has  so  far  happened.  Yours,  etc. 

26,  Ely-place,  E.  C,  Dec.  18.  .  M.  Grunebaum. 

The  Times,  London,  England,  November  22,  1913: 

A  curious  instance  of  the  zeal  of  the  department  is  reported.  .\  local  hostelry  was  formerly 
on  the  exchange,  but  the  service  was  discontinued  more  than  two  years  ago.  Twice  within  the  past 
fortnight  workmen  have  called  there  in  order  to  examine  the  instrument  "because  complaints  had 
been  received  that  the  subscriber  could  not  get  through." 

The  Daily  Mail.  London,  England,  July  18,  1912: 

Users  of  the  telephone  will  read  with  astonishment  the  figures  contained  in  Mr.  Herbert  Sam- 
uel's statement  defending  the  Post  Office  management  of  the  London  telephones.  It  is  something,  no 
doubt,  after  the  optimistic  assurances  of  the  past,  to  find  the  Postmaster-General  admitting  that  the 
present  situation  is  "not  satisfactory"  and  that  the  Post  Office  operators  do  sometimes  make  mistakes. 
But  he  minimises  the  grievances  of  the  public  and  can  give  no  guarantee  of  reform  till  the  date  when 
all  the  difficulties  caused  by  the  transfer  of  the  National  Telephone  Company's  system  have  been 
overcome.  Six  months  have  already  passed  and  there  has  so  far  been  deterioration,  not  improve- 
ment. At  this  rate  we  cannot  expect  a  reasonably  efficient  service  much  before  the  millennium.  Yet 
if  skilled  operators  are  not  available  in  sufficient  number,  as  Mr.  Samuel  pleads,  the  entire  responsi- 
bility rests  with  the  short-sightedness  and  parsimony  of  the  Post  Office.  It  took  no  steps  whatever  in 
advance  to  meet  the  needs  of  to-day  by  training  men  and  women  for  the  work.  Consequently  the  sys- 
tem is  now  both  understaffed  and  inefficiently  staffed,  and  the  subscriber's  temper  is  sorely  tried. 

The  Daily  Mail,  London,  England,  July  5,  1912: 

It  is  now  six  months  since  the  Post  Office  undertook  the  working  of  the  telephone  system  of 
the  countrj'.  And  it  might  be  supposed  that  in  that  time  the  difficulties  consequent  on  the  transfer 
of  such  an  immense  undertaking  would  have  been  overcome;  that  the  smooth  working  of  the  service 
would  have  been  brought  about ;  and,  above  all,  that  some  of  the  improvements  expected  when  a 
Government  department,  with  all  its  resources,  takes  over  a  great  organization  would  have  been  re- 
alized. But  the  reverse  is  the  case.  Complaints  of  inefficiency,  delay,  mismanagement,  "wTong  num- 
bers," and  inattention  against  the  Post  Office  are  increasing  in  number,  not  diminishing. 

From  the  Port  of  London  Authority  to  the  small  business  man  and  shopkeeper,  everyone  is  mak- 
ing the  same  complaint,  that  "the  service  is  deteriorating." 

Letter  in  the  Daily  Mail,  London,  England,  June  27,  1912: 

Sir, — On  March  25  the  telephone  contract  for  my  Wimbledon  house  expired.  On  March  18 
I  was  cut  off  with  a  view  to  installing  another  instrument  at  my  new  house  at  Kingston-on-Thames. 
The  telephone  authorities  asked  to  let  them  have  fifteen  days'  notice  to  enable  them  to  put  in  the  new 
telephone,  which  notice  I  gave  at  once. 

From  that  date  till  now  no  instrument  has  been  installed  (although  it  is  installed  in  a  house 
within  200  yards  of  my  own),  but  I  have  received  a  remarkable  series  of  eight  communications,  of 
which  I  give  a  summary : 

1.  Immediate  payment  demanded  for  my  non-existent  telephone. 

2.  Legal  proceedings  threatened  to  recover  the  money,  which  is  payable  in  advance. 

3.  A  promise  of  immediate  attention  to  my  protests. 

4.  A  series  of  comminatory  telephone  conversations  to  and  from  my  city  office,  followed  by 

5.  A  notice  cutting  off  my  still  imaginary  telephone,  and  again  legal  proceedings  promised. 

6.  The  scene  then  changed  and  I  received  a  supplicatory  letter  asking  me  to  use  my  good  of- 
fices with  the  local  authorities  in  the  matter  of  wayleaves  (which  I  did). 

57 


7.  A  penitent  promise  to  compensate  me  for  the  delay  by  post-dating  my  next  contract. 

8.  (On  June  18)  Two  forms  arrived  threatening  immediate  proceedings  unless  my  subscrip- 
tion was  paid  at  once.  To  these  I  replied  that  their  office  was  evidently  in  a  state  of  hopeless  disor- 
ganization and  that  I  should  reply  to  no  more»  communications. 

To  this  I  have  had  no  answer  at  present,  but  it  will  probably  come  in  the  shape  of  a  bill  for 
excess  calls.  Herbert  M.  Ellis. 

Beverley  Wood,  Coombe,  Kingston-on-Thames. 

The  Daily  Mail,  London,  England,  January    31,  1912: 

While  Mr.  Herbert  Samuel  is  touring  the  country  and  delivering  political  speeches  in  which  he 
complacently  congratulates  himself  and  everybody  upon  the  supreme  efficiency  of  the  Government, 
the  administration  of  his  Department  is  going  from  bad  to  worse.  Thus  is  Mr.  Bonar  Law's  charge 
of  incompetence  against  Ministers  justified  by  the  practical  test.  It  is  less  than  a  month  since  the 
Post  Office  destroyed  its  sole  remaining  competitor  in  the  telephone  service  and  took  over  the  National 
Company's  system.  But  already  complaints  are  heard  from  every  quarter  of  a  marked  decline  in  the 
efficiency  of  the  telephone.  One  subscriber  writes  that  "the  service  is  in  a  state  of  chaos."  Callers 
cannot  get  through ;  wrong  calls  are  constantly  made ;  wrong  numbers  are  frequently  given ;  and  the 
method  of  keeping  accounts  appears  to  be  fantastic.  Moreover,  the  service  on  the  old  Post  Office 
system  has  become  perceptibly  slower.  More  time  is  occupied  at  the  exchanges  in  making  the  connec- 
tion, and  the  caller  is  too  often  put  off  with  "line  engaged"  or  the  detestable  buzzing  instrument. 


When  the  House  of  Commons  meets  next  month  Mr.  Samuel  should  be  required  to  take  imme- 
diate steps  to  call  his  Department  to  order.  We  cannot  but  think  that  he  would  turn  his  energy  to 
better  purpose  by  attending  to  the  business  which  the  nation  has  committed  to  him  instead  of  going 
about  the  country  delivering  orations  on  the  absurd  Insurance  Act. 

Bulletin  dcs  Abonnes  au  Telephone  (Telephone  Subscribers'  Bulletin),  Paris,  France,  February, 
1909,  p.  3  (translation)  : 

Something  is  rotten  in  the  state  of  Telephones.  The  knife  should  be  applied  by  the  Chamber 
without  hesitation. 

Only  a  thoroufjh  Parliamentary  inquiry  such  as  was  held  in  connection  with  the  Navy  can 
disclose  the  cause  of  the  trouble,  and  after  having  heard  the  representatives  of  the  staff,  the  subscrib- 
ers, and  outside  experts,  we  shall  be  able  to  reorganize  this  anarchical  Administration,  fix  responsi- 
bility,  *   *   *   and  draw  up  a  serious  program  of  reform. 

We  have  floundered  long  enough  in  a  mess  which  daily  grows  worse. 


STAGNATION  VS.  EXPANSION 
(Foreign — Official) 

From  the  Chicago,  Illinois,  American,  February  4,  1914: 

"We  have  governmental  ownership  of  telephone,  telegraph  and  postal  systems  at  home,"  said 
Othon  de  Fejcr,  chief  of  the  (Hungarian  Government)  telephone  department.  "I  do  not  approve  of 
this  system  so  much  as  privately  owned  companies  because  the  government  does  not  canvass  for  busi- 
ness and  extend  the  systems,  which  of  course  is  the  thing  which  makes  them  valuable  to  the  people." 

British  Parliamentary  Debates,  Official  Report,  April  24,  1913,  page  577: 
Mr.  Herbert  Samuel:     ♦    *    *    Although  we  are  not   far  behind   Germany,  and   are  much 

58 


ahead  of  France  and  most  of  the  Southern  Continental  countries,  the  telephone  here  is  very  inade- 
quately developed  compared  with  the  United  States,  or  Canada,  or  the  Scandinavian  countries. 

British  Parliamentary  Debates,  Official  Report,  April  24,  1913,  p.  592: 

Mr.  Goldman  :  The  United  States  put  in  last  year  no  fewer  than  749,000  telcpiiones.  We  in- 
creased our  service  by  fewer  than  38,000  telephones.  In  other  words,  the  United  States  in  one  year 
increased  their  service  by  more  than  the  whole  ser\'ice  of  this  country. 

Article  by  C.  S.  Goldman,  M.  P.,  in  the  Daily  Graphic,  London,  England,  March  3,  1913: 
To-day  the  question  is,  "Are  you  on  the  telephone?"  Under  progressive  control  the  question 
would  be,  "Surely  you  are  not  off  the  telephone?"  In  other  words,  the  telephone  should  be  a  matter 
of  commercial  and  social  necessity  instead  of,  as  at  present,  an  article  of  luxury.  If  it  were  necessary 
to  seek  for  a  fair  ground  of  condemnation  of  existing  management,  one  would  h:ive  need  to  go  no 
further  than  the  "rates"  question.  The  Government  have  done  absolutely  nothing  in  this  pressing 
matter,  and  this  in  spite  of  all  the  pressure  put  upon  them  by  public  bodies  and  private  interests. 

The  London,  England,  Electrician,  January  17,  1913,  p.  738: 

Last  week  a  deputation  from  the  Town  Councils  of  Dundee,  Aberdeen,  Arbroath  and  Mont- 
rose, and  Chambers  of  Commerce  and  other  bodies  in  these  towns,  waited  on  the  Postmaster-General 
(Mr.  H.  Samuel)  to  urge  upon  him  the  necessity  of  extending  the  undcrg.ound  telegraph  cables  from 
Edinburgh  to  Dundee  and  Aberdeen. 


In  reply,  Mr.  Samuel  said  the  extension  of  the  underground  telegraph  cables  to  Dundee  and 
Aberdeen  would  involve  a  capital  cost  of  £130,000,  which  would  mean  an  annual  charge  for  interest 
and  sinking  fund  for  15  years  of  £11,287.  The  total  gross  telegraph  revenue  in  Dundee  and  Aber- 
deen was  £16,000  a  year  before  deducting  any  expenses  or  charges.  The  deputation  were  asking  for 
an  annual  expenditure  of  more  than  two-thirds  of  the  gross  revenue — he  did  not  know  that  there  was 
any  net  revenue — in  order  to  avoid  occasional  delays.  There  was  a  loss  in  the  telegraph  system  of  the 
countr)'  of  over  £1,000,000  a  year,  and  therefore  one  had  to  look  carefully  at  any  additional  expendi- 
ture. 

British  ParHamentary  Debates,  Official  Report,  August  17,  1911,  p.  2118: 
Mr.  Peto:  *  *  *  The  Government  have  indicated  to  the  House  that  they  rather  look  to  the 
United  States  of  America  as  a  model  of  what  we  are  to  do  in  this  country.  If  that  is  so,  I  think  it 
would  be  quite  in  order  to  put  briefly  before  the  House  what  that  standard  is  we  are  going  to  try  to 
reach.  The  standard  in  the  United  States  is  76  per  thousand  persons,  whilst  here  it  is  only  15.  In 
order  to  reach  the  standard  of  the  United  States,  which  is  obviously  very  largely  a  question  of  the  de- 
velopment of  telephones  in  the  enormous  rural  areas,  we  should  have  to  increase  our  telephone  sta- 
tions by  2,500,000,  and  we  should  iiave  to  spend  £76,500,000  at  the  rate  of  £30  per  station. 

From  British  Parliamentary  Debates,  Official  Report,  August  16,  1911,  p.  2007: 
Mr.  Herbert  Samuel:  *  *  *  You  cannot,  irrespective  of  loss,  run  your  telegraph  system 
into  remote,  thinly-populated  districts  without  a  full  guarantee.  My  hon.  Friend  persuaded  my  hon. 
Friend  and  colleague  the  Assistant  Postmaster-General,  who  perhaps  may  be  more  softhearted  than 
myself,  in  the  kindness  of  his  heart  to  represent  the  matter  to  the  Treasury.  I  am  not  sure  that  I 
should  have  gone  so  far,  but  the  Treasury  having  gone  into  the  matter  came  to  the  conclusion,  which 
I  came  to  some  time  ago,  that  there  was  no  cause  for  charging  the  general  taxpayers  of  the  country 
with  this  particular  extension.  I  am  afraid,  in  view  of  the  action  taken  by  the  Treasury,  I  cannot 
favor  the  telegraph  being  extended  to  that  place. 

Statistics  compiled  from  official  reports  (published,  or  by  e.xchange  of  correspondence)  of  the 
various  governments,  giving  the  number  of  telephones  per  100  population  in  European  communities, 

59 


and  showing  how  European  governments  have  exploited  the  larger  and  more  profitable  places,  and 
under-developed  the  smaller  and  less  profitable  ones : 

No.  of  Telephones  No.  of  Telephones  Proportion 

per  100  pop.  in  per  zoo  pop.  in  of  rural 

e.rchanges  of  over  e.vchanges  of  less  than  to  urban 

Country                                                            100,000  population.  100,000  population.  development 

Austria 2.6  .30  11.5^0 

Belgium 1.8  .36  20.0% 

France 2.3  .47  20.4% 

German  Empire  4.6  1.20  26.1% 

Great  Britain 2.7  .76  28.27o 

Hungary 2.6  .25  9.6% 

Italy 1.2  .14  11.7% 

Netherlands 3.0  .74  24.6% 

Sweden  (private  operation  in  Stockholm) ....                15.7  2.65  16.9% 

Switzerland 6.0  1.85  30.8^0 

Total  of  above  countries 3.16  .67  21.2% 

United  States  11.40  8.50  74.6% 


to 


British  Parliamentary  Debates,  Official  Report,  June  19,  1911,  p.  87: 

Mr.  Peto:  *  *  *  \  want  to  say  a  word  or  two  about  the  comparison  with  the  United  States 
of  America,  which  is  constantly  made  by  the  Post  Office  in  their  literature.  I  understand  in  America 
there  are  seventy-six  telephone  subscribers  per  thousand  of  population  whilst  in  this  country  there  are 
only  fifteen  per  thousand.  It  is  obvious  we  have  a  great  deal  of  leeway  to  make  up  before  we  arrive 
at  that  standard. 

Statement  of  Deputy  Joseph  Noulens,  Reporter  of  the  Committee  of  the  French  Chamber  of 
Deputies  on  Posts  and  Telegraphs  (as  published  in  Le  Journal,  Paris,  reprinted  in  the  National  Tele- 
phone Journal,  London,  England,  September,  1908,  p.  24)  : 

Dominated  by  the  routine  methods  which  are  so  characteristic  of  it,  the  Administration  has  not 
foreseen  the  rapid  development  of  the  telephone.  Why  should  it  seek  to  popularize  this  method  of 
communication,  since,  from  the  Administration  point  of  view,  it  appeared  to  be  a  luxury  reserved  only 
for  the  few? 

(Foreign — Editorial) 

Indianapolis,   Ind.,  Star,   December  25,    1913: 

Representative  David  J.  Lewis,  of  Maryland,  who  advocates  Government  ownership  of  tele- 
phones, proceeds  properly  in  assuming  as  an  abstract  consideration  that  use  runs  inversely  as  the 
rates,  but  this  statement  that  the  United  States  ranks  ninth  among  the  nations  of  the  world  as  user 
of  telephone  does  not  agree  with  the  review  of  stale-owned  telephones  contributed  to  "Concerning 
Municipal  Ownership,"  by  Sydney  Brooks,  a  Londoner. 

************ 

Mr.  Brooks  assumes  that  there  are  sixteei;  millions  telephones  in  use  in  the  world,  of  which 
twelve  millions — his  estimate — are  on  the  North  American  continent.  Europe  by  his  estimate  has 
only  three  millions.  He  declares  that,  roughly  speaking,  there  is  a  telephone  for  every  nine  Ameri- 
cans, and  if  the  same  proportion  obtained  in  Europe,  Dcmnark  would  have  three  times  as  many 
telephones  as  she  actually  possesses;  Sweden  three  and  one-half  times;  Norway  four  and  one-half 
times;  Switzerland  five  times;  Germany  six  and  one-half  times;  Great  Britain  seven  and  one-half 
times;  the  Netherlands  eleven  times;  Belgium  nearly  eighteen  times  as  many;  France  nineteen  times; 
.\ustria  all  but  thirty  times;  Hungary  thirty-seven  times;  Italy  fifty-six  times;  Portugal  and  Spain 
about  ninety  times;  Russia  one  hundred  and  five  times,   and    Greece,    Servia   and    Bulgaria   over   one 

60 


hundred  seventy  and  two  hundred  four  time*  as  many.  State  ownership,  he  declares,  is  to  blame  for 
the  puny  development  of  the  telephone  as  a  commercial  necessity  and  social  convenience  in  Europe. 
Service  there  is  inferior  and  the  equipment,  in  antiijuatcd  type  mostly  of  the  magneto  telephone,  gen- 
erally discarded  in  this  country. 

Public  expenditures  of  the  telephone  are  restricted  through  a  mistaken  sense  of  economy  on 
the  part  of  governing  officials,  and  the  indiscriminate  granting  of  working  licenses  to  municipalities 
and  individuals  has  forbidden  development  by  private  investors. 

************ 

.American  experts  in  telephony  cite  the  disparity  of  service  units  in  this  country  and  abroad  as 
explaining  the  difference  in  prevalent  rates,  on  a  theory  which  they  maintain  by  a  plausible  chain  of 
reasoning,  that  as  the  number  of  stations  increases  the  cost  of  the  individual  station  rises. 

The  Times,  London,  England,  December  1,  1913: 

As  the  result  of  a  short-sighted  Government  policy,  of  official  mismanagement,  and  the  paro- 
chial attitude  of  local  authorities,  the  number  of  telephones  per  hundred  of  the  population  in  Great 
Britain  to-day  is  1.4,  as  against  1.6  in  Germany,  2.1  in  Switzerland,  3.5  in  Dtnmark  and  Sweden, 
3.7  in  Canada,  and  8.1  in  the  United  States.  London,  the  greatest  city  in  the  world,  boasts  2.8  tele- 
phones for  even,'  hundred  of  its  inhabitants,  as  against  a  percentage  of  5.3  in  Berlin,  1 1 .0  in  Chicago, 
19.9  in  Stockholm,  and  24.0  in  Los  Angeles. 

Letter  to  the  London,  England,  Daily  Mail,  September  2,  1913: 

Sir:  It  may  interest  and  perhaps  surprise  some  of  your  readers  to  learn  the  cost  of  a  telephone 
in  a  country  district  in  England. 

My  house  is  situated  within  a  radius  of  four  and  a  half  miles  of  the  e-xchange  at  Bury  St.  Ed- 
munds, and  in  answer  to  my  inquiry,  I  am  informed  that  "the  annual  subscription  would  be  approxi- 
mately £40."  As  I  believe  that  there  is  no  extra  charge  for  any  telephone  within  a  mile  of  the 
exchange,  it  means  that  I  am  to  be  charged  at  the  rate  of  £10  a  year  for  each  mile  of  extension. 

My  only  hope  of  ever  having  a  telephone  here  is  that  I  hear  the  Postmaster-General  is  now  on 
a  visit  to  America  for  the  purpose  of  studying  the  telephone  business.  I  suggest  that  on  his  return 
night  schools  should  be  established  where  telephone  officials  might  be  taught  something  about  tele- 
phones. J.  S.  Austen. 

Plumton  House,  Bury  St.  Edmunds. 

From  the  London,  England,  Times,  July  20,  1910: 

Great  Britain  at  the  beginning  of  this  year  had  602,209  telephones  in  service,  so  the  American 
Bell  system  gained  in  one  year  more  telephones  (nearly  30  per  cent,  more)  than  have  been  installed 
in  Great  Britain  since  the  telephone  began.  The  total  number  of  telephones  in  the  Bell  system  is 
Syi  times  greater  than  in  the  British  system.  Allowing  for  difference  in  i)opulation,  there  are  more 
than  four  American  telephones  to  one  British  telephone.  This  disparity  is  increasing  rapidly  in  favor 
of  America,  as  the  development  of  the  American  system  is  increasing  just  twenty  times  more  rapidly 
than  that  of  the  British  system.  If  the  comparison  is  extended  to  the  whole  of  Europe,  it  is  found 
that  the  Bell  system  has  just  twice  as  many  telephones  as  all  Europe.  The  entire  group  of  twenty 
European  countries  with  an  aggregate  population  of  405  millions  can  only  muster  2,583,000  telephones 
as  against  the  5,142,692  telephones  of  a  single  organization  in  America,  serving  a  population  of  be- 
tween 80  and  90  millions.  The  telephone  development  in  proportion  to  population  is  therefore  ten 
times  higher  in  America  than  it  is  throughout  Europe. 

From  the  London,  England,  Times,  July  20,  1910: 

In  Europe  the  general  existence  of  State  telegraph  monopolies  has  doomed  the  telephone  to  a 
Cinderella-like  existence,  and  no  fairy  prince  has  yet  appeared  from  among  the  ranks  of  the  jHjliticians 
with  sufficient  insight  to  recognize  the  possibilities  of  the  suppressed  and  harassed  telephone  and  to 

61 


secure  them  full  scope.    The  fortunate  Americans  have  no  State  monopolies,  and  both  telegraph  and 
telephone  have  been  left  to  work  out  their  own  salvation  as  industrial  enterprises. 

Under  these  conditions  the  telephone  service  has  experienced  a  prodigious  development.  The 
wonderful  facilities  provided  by  a  system  of  instantaneous  and  direct  communication  appeal  readily 
to  such  a  practical  people  as  the  Americans,  and  the  efficiency  and  scope  of  the  telephone  in  America 
have  been  so  steadily  improved  and  extended  that  the  telephone  service  has  become  part  of  the  daily 
business  and  social  life  of  the  people  to  an  extent  unapproached  in  any  European  country. 

Extract  from  "Public  Finance,"  by  C.  F.  Bastable,  Professor  of  Political  Economy  at  the  Uni- 
versity of  Dublin,  Ireland  (3d  Edition,  1903,  Book  II,  Chapter  3,  Pages  210-211)  : 

The  dealings  of  state  agencies  with  new  inventions  are  the  worst  blot  on  public  administration, 
and  it  seems  that  there  is  this  risk  in  the  state  telegraphs,  that  though  they  are  quite  up  to  the  stand- 
ard at  their  inception,  they  almost  insensibly  fall  behind  as  it  advances  with  growing  knowledge. 
This  consideration  belongs  to  economic  policy  rather  than  finance,  which,  however,  suiters  from  any 
hindrance  to  commercial  expansion  and  is  certainly  not  likely  to  gain  by  state  telegraphy. 

(American — Editorial) 

Boston,  Mass.,  Advertiser,  December  22,  1913: 

Another  serious  objection  to  Government  ownership  is  that  under  it  expansion  would  be  much 
slower  than  at  present.  The  telephone  companies  are  pushing  their  lines  constantly  into  new  territory 
and  opening  up  a  larger  part  of  the  country.  Very  few  will  contend  that  the  Government  would 
attempt  to  extend  its  lines  into  new  sections  except  after  petitions  had  been  brought  by  the  people 
therein.  And  even  then  a  vast  amount  of  red  tape  would  have  to  be  unrolled  before  anything  would 
be  done.  In  other  words,  instead  of  leading  the  demand,  the  Government  would  follow  it,  which 
means  a  great  deal  to  the  development  of  the  country.  *  *  *  The  initiative  of  private  enterprise 
always  has  been  far  greater  than  that  of  the  Government,  in  any  line,  for  a  nurnber  of  reasons.  And 
it  is  difficult  to  see  how  this  can  be  changed,  because  of  the  absence  of  direct  responsible  authority 
in  Government  matters,  and  the  divorce  between  the  operating  and  financial  departments.  Nothing 
could  be  done  until  the  money  had  been  provided  and  the  delay  in  Congressional  appropriation  is 
proverbial. 

Northampton,  Mass.,  Gazette,  December  18,  1913: 

As  a  private  enterprise  the  telephone  company  is  very  successful  and  is  also  very  accommodat- 
ing to  public  well-being.  The  Amercian  telephone  system  will,  in  1913,  have  gross  revenues  of  close 
to  ?220,000,000,  which  means  a  gain  during  the  last  six  years  of  $90,000,000,  or  70%.  The  balance 
of  net  profits  for  dividends  will  be  around  $50,000,000,  compared  with  $30,000,000  during  1907.  The 
Bell  system  is  devoting  31  cents  of  every  $1.00  of  gross  to  maintenance  and  depreciation,  which  means 
an  outlay  of  close  to  $70,000,000  during  1913. 

New  York  Journal  of  Commerce,  December  12,  1913: 

When  a  large  sum  of  money  has  been  embarked  in  plant  adapted  to  a  specific  purpose,  the 
public  administration  always  looks  with  disfavor  on  any  new  invention  that  may  involve  the  scrap- 
ping of  that  plant.  While  the  same  may  apply  to  any  large  private  enterprise,  nevertheless  while  the 
field  is  open  competitors  with  no  accumulative  plant  are  always  to  be  found  ready  to  risk  their  money 
in  exploiting  the  new  idea  on  the  chance  of  reaping  immediate  profit. 

New  York  Commercial,  November,  1913: 

If  the  city  of  New  York  or  the  Federal  Government  at  Washington  owned  the  telephone  sys- 
tem of  the  municipality  or  the  nation,  as  the  case  might  be,  and  should  make  such  ample  provision  for 
future  needs  as  the  private  corporations  are  now  in  the  habit  of  doing,  the  cry  of  graft  and  extrava- 
gance would  be  raised  at  once.  No  administrator  of  public  affairs  would  dare  to  spend  money 
intelligently  in  this  way. 

62 


Extract  from  an  article  by  Dr.  Jacob  Gould  Schunnan,  President  of  Cornell  University,  pub- 
lished in  the  New  York  Tribune,  February  25,  1912: 

The  most  that  any  government  has  ever  done  is  to  provide  honest  and  efficient  officials  for  the 
conduct  of  public  business  along  lines  already  established  and  by  the  use  of  methods  and  agencies 
already  familiar  in  private  business.  Creative  epochs  in  industry  are  the  work  of  individuals,  not  of 
governments. 


FINANCIAL   CONSTRICTION 

{Foreign — Official) 

British  Parliamentary  Debates,  Official  Report,  April  24,  1913,  pp.  593-594: 
Mr.  Goldman  ;  *  *  *  Take  the  trunk  (i.  e.,  long  distance)  service  to  which  the  Postmas- 
ter-General also  referred.  There  was  an  exclusive  monopoly.  The  Government  have  been  run- 
ning the  trunk  service  for  fifteen  years  and  we  can  test  their  intentions  and  activities  by  their 
work  in  connection  with  that  service.  If  we  look  at  the  records  we  see  in  the  figures  relating  to 
trunk  service  the  rapid  development  which  is  characterising  itself  in  all  branches  of  telephone  ser- 
vices abroad.  I  find  that  in  the  years  1910  to  1912  there  has  been  no  actual  increase.  There  has 
actually  been  a  drop  in  construction  which  also  coincides  with  a  decrease  in  the  additional  circuits 
that  have  been  added  to  the  service.  In  1910  the  expenditure  in  respect  of  the  service  was  £371,776; 
in  1911  it  was  £279,855,  and  in  1912  it  was  only  £255,000.  In  other  words,  the  expenditure  on  the 
trunk  service  has  declined  by  no  less  than  one-third.  In  1911  they  added  no  fewer  than  182  fresh 
circuits ;  in  1912  there  actually  is  a  reduction  down  to  145.  During  this  period  there  has  been  a  steady 
increase  in  telephones  in  the  local  areas  and  it  is  an  elementary  fact  that  the  more  people  use  the 
local  service,  the  more  people  require  the  trunk  service.  No  doubt  the  Postmaster-General  did  rec- 
ognize the  neglect  of  his  own  service  in  the  matter  of  these  trunks,  because  he  suddenly  came 
forward  last  year  and  stated  to  the  House  that  he  intended  to  spend  in  the  coming  year  £1,000,000 
on  the  trunk  service.  Again,  the  promise  of  the  Postmaster-General  in  that  respect  has  not  been  real- 
ized, because,  instead  of  having  spent  £1,000,000  as  he  intended  to  spend,  on  the  trunk  service,  the 
expenditure  only  amounted  to  approximately  £500,000. 

British  Parliamentarj'  Debates,  Official  Report,  April  24,  1913,-pp.  592  ff. : 

Mr.  Goldman:  *  *  *  The  United  States  *  *  *  spent  last  year  no  less  than  £8,000,000 
on  additional  plant,  and  propose  to  do  the  same  this  year,  as  compared  with  the  insignificant  amount 
which  the  Postmaster-General  now  proposes  to  spend  on  the  telephone  service. 

This  continued  delay  in  carrying  out  necessary  construction  is  most  discouraging  to  those  who 
had  hoped  for  efficiency  in  the  Post  Office  management. 

************ 

When  we  faced  the  Postmaster-General  last  year  with  our  criticisms,  he  silenced  us  by  saying 
that  he  intended  to  spend  £2,700,000  on  the  telephone  service  this  year.  Again  he  has  not  fulfilled 
his  promise. 

From  the  Report  of  the  Royal  Commission  .Appointed  to  Investigate  the  Postal,  Telegraph  and 
Telephone  Services  of  the  Commonwealth  of  Australia  (ordered  to  be  printed  October  5,  1910) : 

Position  getting  45      The  Starved  condition  of  the  services  is  largely  answerable  for  the  imper- 

fect working  of  the  telephonic  and  telegraphic  installations. 

63 


worse. 


46.  The  reason  assigned  by  all  the  officials  for  the  failure  to  place  the  ser- 
vices in  proper  working  order  was  want  of  sufficient  funds.  There  is  evidence  that 
the  Department  in  1901  endeavored,  through  the  Treasurer  of  the  time,  to  obtain  the 
necessary  funds  to  place  the  services  in  an  efficient  condition  by  resorting  to  a  loan, 
but   Parliament  refused  to  sanction  this  proposal.     The  curtailment  of  funds  at  that 

tunK"^  "^"^  °'  period  was  apparently  the  result  of  the  desire  to  keep  the  cost  of  Federation  within 
a  limit  of  £300,000  per  annum.  The  adoption  of  that  course,  in  spite  of  the  de- 
mands of  the  Post  and  Telegraph  Department,  is,  in  the  opinion  of  your  Commis- 
sioners, evidence  that  the  system  of  management  is  faulty,  in  that  it  permitted  the 
Treasurer  to  assume  financial  control  of  services  for  whose  efficiency  he  was  not 
responsible.  This  aspect  of  the  position  is  emphasized  by  the  fact  that  the  Treasurer 
was  at  that  time  aware  of  the  necessities  of  the  Post  and  Telegraph  Department,  not- 
withstanding which  he  returned  to  the  States  Governments  the  whole  of  the  surplus 
revenue  beyond  their  constitutional  proportion.  *  *  *  j^e  Central  Executive, 
though  representing  to  the  Postmaster-General  the  omission  to  supply  sufficient  funds, 
should  have  more  persistently  urged  upon  him  the  results  that  would  occur  from  a 

^f'fundl'"'^''''"""'  continuation  of  the  starvation  policy.  This  matter  will  be  further  dealt  with  in  the 
financial  section  of  this  Report. 


115.  The  result  of  unduly  curtailing  expenditure  was  pointed  out  repeatedly 
by  the  Department,  and  the  required  provision  was  made  on  the  Estimates,  but  was 
reduced  by  the  Treasurer.  The  longer  reconstruction  is  deferred  and  the  longer 
installation  of  a  new  system  is  postponed  the  more  expensive  the  work  becomes,  on 
account  of  extensions  made  to  the  old  system.  Construction  methods  were  found  to 
MnstTucTion"""'  '"  '^^  practically  the  same  as  in  1901  as  the  Department  claimed  it  had  been  impossible 
to  improve  those  methods  since  that  date,  although  the  adoption  of  improved  methods 
would  obviously  have  tended  toward  economy.  It  may  be  mentioned  that  between  1886 
and  1904  the  New  York  Telephone  Company's  plant  was  reconstructed  three  times  to 
bring  the  equipment  up  to  the  highest  standard,  and  to  render  the  service  more  effi- 
cient. From  1900  to  1907  the  Bell  Telephone  Company,  United  States  of  America, 
spent  about  £70,000,000  on  telephone  undertakings. 


methods. 


From  speech  by  Deputy  M.  T.  Steeg,  in  the  French  Chamber  of  Deputies,  Session  of  June  23, 
1910  (French  Senate  Document  No.  165) : 

The  history  of  the  telephone  is  only  the  story  of  successive  programs,  very  brilliantly  conceived, 
but  never  realized  for  lack  of  resources. 

(Here  Deputy  Steeg  reports  a  scries  of  transactions  indicating  how  the  administration  of  tele- 
phones by  the  French  Government  has  been  hampered  through  financial  constriction,  and  goes  on  to 
say): 

Next  M.  Millerand  took  up  the  study  of  the  hill,  completed  a  jirogram  of  reforms  and  was 
looking  for  a  disinterested  person  who  would  lend  him  the  100  million  francs  needed  to  effectuate 
the  plan.  Not  being  able  to  borrow  for  the  needs  of  the  services,  the  Administration  asked  the  Cham- 
ber of  Commerce  of  Paris  to  do  what  the  Administration  was  incapable  of  doing. 

( Foreign — Editorial) 

Le  Journal  dcs  Transports.  Paris,  France,  December,  1912  (translation)  : 

We  said  the  State  is  a  very  ])oor  businessman  indeed.     It  is  also  a  wretched  financier.     The 

64 


report  of   M.  Dalimier,  a  radical   who  cannot  be     suspected  of  republicanism,  furnishes  us  startling 
proof  of  this. 

***♦♦♦»♦»»»* 

It  is  not  necessary  to  add  any  more.  The  criticisms  directed  against  the  Postal,  Telegraph  and 
Telephone  Administration  in  the  Chamber  and  before  the  Budgetary  Commission,  will,  alas,  be  use- 
less. All  the  irregularities,  all  the  imperfections  we  have  pointed  out,  are  inherent  in  the  system  of 
operation  by  the  State,  of  services  for  which  it  is  unprepared.  We  repeat  again  and  again  that  the 
State  was  not  meant  to  be  a  business  man.  The  criticism  of  the  Post,  Telegrajih  and  Telephone  Admin- 
istration can  be  applied  equally  to  the  Powder  monopoly,  the  National  Printing  Office,  the  Match 
monopoly,  the  Arsenals  and  the  State  Railway  Administrations. 

Xew  York  Press.  June  21.  1910: 

Telephone  interests  here  are  watching  closely  developments  in  Germany,  where  criticism  has 
been  provoked  because  the  supplementary  budget  for  telephone  purposes  amounts  to  only  25,000,000 
marks,  as  compared  with  44,800,000  marks  in  1907,  60,000,000  marks  in  1908,  and  45,000,000  marks 
in  1909.  It  is  contended  that  the  Post  and  Telegraph  Department  of  that  country  is  too  parsimonious, 
and,  in  asking  for  so  small  an  amount,  has  not  paid  proper  attention  to  the  need  for  improvement  and 
extension  of  its  system. 

The  Times,  London,  England,  July  20,  1910: 

The  public  of  European  countries  finds  itself  denied  a  highly  developed  and  efficient  telephone 
service,  and  thereby  suffers  incalculable  daily  loss.  European  capital  goes  freely  to  America  to  develop 
the  telephone  there,  but  the  European  politician  and  the  European  Government  official  refuse  to  allow 
European  capital,  or  any  other,  to  develop  the  telephone  in  Europe. 

(American — Editorial) 

Extract  from  the  report  by  S.  Gale  Lowrie  (appointed  by  the  Wisconsin  State  Board  of  Public 
Affairs,  1912,  to  study  Budget  systems) : 

It  takes  but  a  small  minority  to  block  an  appropriation.  A  slight  majority  in  one  house  can 
refuse  a  grant  for  a  service  which  the  entire  lower  house,  part  of  the  upper  house  and  the  governor 
earnestly  desire.  This  is  a  minority  rather  than  popular  control.  The  theory  that  the  annual  system 
of  appropriations  increases  the  control  of  the  people  over  appropriations  harks  back  to  the  time  of 
limited  appropriations  for  royal  services  and  has  no  place  in  our  modern  legislative  systems. 

Frequent  comparisons  have  been  made  of  late  between  governmental  work  and  that  of  a  busi- 
ness enterprise,  and  although  there  are  well  recognized  differences  between  them  there  are  many 
points  of  similarity.  It  would  be  impossible  to  conduct  any  industrial  enterprise  upon  such  a  policy 
of  temporary  planning  as  the  limited  method  of  support  implies.  Every  large  project  must  have  a 
design  carefuly  thought  out  and  running  through  a  period  of  years,  and  in  order  that  a  plan  may  have 
permanency  it  must  have  a  method  of  support  which  is  not  likely  to  be  interrupted  at  frequent  intervals. 


TAXATION 
( Foreign — Editorial ) 

New  York  Times,  December  18,  1913: 

England's  postal  telegraph  has  produced  a  deficiency  of  £17,455,861  sterling  in  order  to  make 
the  British  postal  telegraph  a  success.  The  taxpayers  have  paid  a  deficit  averaging  £400,000  for  forty 
years  and  are  now  paying  at  the  rate  of  £840,000. 

65 


{American — Editorial) 

Chicago,  111.,  Farm  and  Home,  January  1,  1914: 

Admitting  both  the  merits  and  demerits  of  the  present  system,  unless  cost  of  service  were  less 
onder  government  ownership  than  at  present,  rates  could  be  no  lower  unless  the  deficit  was  made 
up  by  general  taxation.  Higher  taxes  to  offset  the  loss  in  the  transportation  department  would  be 
unpopular  indeed. 

There  is  no  magic  in  ownership  and  operation  of  utilities  by  corporation  or  by  township, 
county,  state  or  nation.  It  is  a  question  of  management.  Receipts  must  be  enough  to  pay  all  expenses 
or  the  deficit  must  be  made  up  otherwise.     Either  way  the  public  has  to  bear  the  cost. 

The  peasantry  of  County  Cork  said  when  home  rule  seemed  imminent  years  ago:  "We  will 
neither  plow  nor  plant  because  now  the  Government  will  support  all  of  us."  The  Government  is 
the  people.     Sometimes  it  is  easier  to*  supervise  and  control  than  to  operate. 

Boston,  Mass.,  Herald,  December,  1913 : 

It  ought  to  be  understood  by  all  intelligent  people  that  everything  performed  by  public  agen- 
cies, whether  of  city,  state  or  nation,  costs  50  per  cent,  more  than  the  same  service  done  under  the 
support  of  self-interest  and  private  initiative.  And  that  extra  50  per  cent,  the  public  must  pay  for 
not  necessarily  .in  prices  immediately  affixed.  The  excess  usually  comes  out  of  general  taxation  and 
is  widely  diffused. 

Syracuse,  N.  Y.,  Herald,  December  18,  1913: 

If  the  Government  should  take  over  the  telegraph  lines  and  cheapen  the  rates  of  service,  the 
real  beneficiaries  would  not  be  the  mass  of  the  people,  but  only  a  relatively  small  proportion  thereof. 
Whatever  else  might  be  said  to  the  principle  thus  put  in  practice,  it  certainly  could  not  be  called  the 
principle  of  the  "greatest  good  to  the  greatest  number." 

Extract  from  the  address  of  Seth  Low,  President  of  the  National  Civic  Federation,  delivered 
at  its  Fourteenth  Annual  Meeting  in  New  York  City  on  December  11,  1913: 

I  make  no  apology,  therefore,  for  pointing  out  briefly,  on  this  occasion,  some  of  the  difficulties 
attaching  to  government  ownership  and  operation  of  railroads  in  a  country  like  ours,  with  a  Federal 
government  evolved  as  ours  has  been,  covering  half  a  continent.  Such  information  as  I  can  command 
leads  me  to  believe  that  in  Germany,  France,  Australia,  Italy  and  Austria,  the  earnings  of  the  state- 
owned  railroads  in  each  country  barely  equal,  if  they  do  equal,  the  sums  paid  in  taxation  by  the  rail- 
roads of  the  United  States. 

Providence,  R.  I.,  Daily  Journal,  October  12,  1913: 

How  many  of  the  farmers  and  the  working  men  of  the  United  States  use  the  long  distance 
telephone  and  telegraph?  This  is  a  question  that  has  not  been  answered.  Probably  very  few  are 
interested  in  rates  because  they  are  not  called  upon  to  have  long  distance  conversations.  But  if  the 
Government  should  duplicate  the  existing  trans-continental  lines  at  an  expense  of  several  hundred  of 
millions  of  dollars,  no  one  could  escape  the  heavy  tax  levy.  Why  should  a  man  who  has  no  use  for 
long  distance  messages  pay  taxes  for  a  government  telephone  system  ? 

Extract  from  an  article  in  The  American  City  (New  York),  April,  1913,  by  George  C.  Whipple, 
Consulting  Professor,  Brooklyn  Polytechnic  Institute: 

The  recent  special  report  of  the  Bureau  of  the  Census  on  financial  statistics  of  cities  of  over 
30,000  inhabitants  *  *  *  showed  that  in  145  cities  the  annual  revenue  receipts  had  increased  in 
eight  years  from  ?20.12  to  $27.24  per  capita,  a  gain  of  35.4  per  cent.  The  payments  for  expenses  and 
interest  increased  from  $16.37  to  $20.53  per  capita.  The  governmental  costs  were  higher  in  the  larger 
cities.  In  New  York  City  the  budget  appropriations  were  $26.90  per  capita  in  1900  and  $34.30  in  1910. 
The  report  also  shows  that  in  many  cities,  and  especially  in  the  larger  ones,  the  bonded  indebtedness  is 
increasing  alarmingly. 

66 


As  long  as  the  cities  continue  to  grow  and  assessed  valuations  continue  to  increase,  the  danger 
ahead  is  not  so  easdy  discerned ;  but  what  will  hapi>en  when  our  cities  cease  to  grow,  when  the  interest 
on  the  debts  incurred  begins  to  bear  more  heavily  on  the  taxpayers?  Will  the  remedy  be  retrenchment 
or  repudiation? 

Were  the  trouble  confined  to  cities  the  case  would  be  bad  enough,  but  it  is  not  confined  to  them. 
State  debts  are  increasing,  and  county  debts,  and  debts  incurred  by  metropolitan  districts  and  by  public 
service  corporations.    Thinking  people  are  becoming  troubled  as  to  how  these  debts  are  to  be  paid. 


EMPLOYEES 
( Foreign — Official ) 

Hull,  England,  Eastern  Morning  Nezvs,  November  24,  1913,  reporting  a  mass  meeting  of  postal 
employees  at  Hull : 

J.  McCarthy  (Chainnan  of  the  Postal  Telegraph  Clerks'  Association) ;  *  *  *  The  Com- 
mittee told  them  that  in  spite  of  repeated  challenges  to  the  staff  no  evidence  was  brought  forward  to 
support  the  proposition  in  the  matter  of  Nsages,  and  that  the  Post  Office  servants  suffered  no  disad- 
vantage as  compared  with  other  workers.  He  wanted  to  say  that  that  was  not  true.  His  own  asso- 
ciation, the  Postal  Telegraph,  proved  up  to  the  hilt  that  the  telegraphists  employed  by  the  private 
cable  companies  were  in  receipt  of  something  like  30  per  cent,  higher  wages  than  the  Post  Office 
workers. 

News  item  in  the  Daily  News  and  Leader,  London,  England,  October  28,  1913,  reporting  a  meet- 
ing of  representatives  of  the  various  postal  unions: 

Mr.  Stewart,  secretary  of  the  Postmen's  Federation,  explaining  the  objects  of  the  conference, 
said  the  postal  unions  should  join  together  in  order  to  fight  "the  common  enemy."  He  was  sorry  to 
have  to  refer  to  the  Postmaster-General  as  the  "common  enemy,"  but  it  was  no  use  mincing  words. 
If  there  was  one  thing  which  had  made  it  necessary  for  ihem  to  consider  amalgamation  it  was  the 
publication  of  the  Holt  Committee's  report. 

Article  by  L.  G.  Chiozza  Money,  M.  P.,  published  in  the  Daily  Neivs  and  Leader,  London,  Eng- 
land, October  10,  1913,  referring  to  the  report  of  the  Holt  Committee  on  Post  Office  Servants,  Wages 
and  Conditions  of  Employment: 

*  *  *  But  the  Committee  use  a  very  poor  argument  when  they  say  that  the  Post  Office  has 
"no  difficulty  in  recruiting  a  sufficient  number  of  persons  competent  for  the  duties  they  have  to  per- 
form." That  is  the  excuse  made  by  every  bad  employer.  Never  was  yet  a  sweater  who  did  not 
assure  you,  and  truly,  that  his  victims  were  eager  to  take  his  pay,  and  that  he  could  get  heaps  more 
at  an  even  lower  rate. 

Resolution  passed  by  the  executive  committee  of  the  Amalgamated  Society  of  Telephone  Em- 
ployees, published  in  the  Electrical  Industries,  London,  England,  October  8,  1913: 

The  committee  particularly  emphasizes  the  fact  that  no  allowance  has  been  made  for  the  admit- 
ted increase  in  the  cost  of  living ;  it  emphatically  protests  against  the  proposal  to  increase  the  number 
of  working  hours  as  applied  to  certain  grades ;  and  rejects  as  totally  inadequate  and  insignificant  such 
paltry  modifications  of  pay  and  conditions  as  are  recommended.  Further,  it  calls  upon  His  Majesty's 
Government  to  deal  immediately  with  the  existing  position,  which  can  only  be  regarded  as  urgent 
and  dangerous. 

Resolution  of  the  Associated  British  National  Telephone  Engineers,  published  in  The  Electri- 
cian, London,  England,  October  3,  1913: 

This  meeting  of  National  Telephone  engineers  views  with  grave  concern  the  recommendations 

67 


of  the  Select  Committee  on  Post  Office  Servants,  and  is  strongly  opposed  to  the  acceptance  of  the 
report  by  His  Majesty's  Government,  on  the  grounds  that  the  recommendations  would  not  appear 
to  be  based  on  the  evidence  tendered,  and  moreover  the  report  lends  itself  to  a  harsh  and  prejudiced 
interpretation  in  its  application  to  the  staff  transferred  into  the  service  of  the  State  from  the  National 
Telephone  Co.  Many  anomaUes  remain,  such  as  the  placing  of  officers  in  Post  Office  grades  the 
maxima  of  which  were,  are,  and  will  continue  to  be,  according  to  the  recommendations,  below  the 
actual  salary  the  officers  were  receiving  at  the  date  of  transfer;  and  the  drafting  of  officers  perform- 
ing the  same  duties  and  borne  on  the  same  class  under  the  National  Telephone  Co.  into  different 
grades  under  the  department,  much  to  their  detriment. 

The  creation  of  artificial  barriers  as  stumbling  blocks  in  the  lines  of  promotion  of  capable  and 
experienced  officers  is  regarded  as  a  retrograde  step,  and  highly  detrimental  to  the  maintenance  of 
the  high  standard  of  efficiency  attained  under  the  Telephone  Company.     *     *     * 

The  degradation  of  responsible  supervising  officers  from  the  major  to  the  minor  staff,  the 
imposition  of  longer  hours  of  duty  and  the  proposed  transfer  of  officers  to  a  grade  inferior  to  that 
which  they  at  present  occupy  is  considered  reactionary,  arbitrary  and  unjustifiable  on  any  grounds. 

The  scales  of  pay  and  the  annual  increments  proposed  are  quite  inadequate,  and  incommen- 
surate with  the  increased  cost  of  living,  conclusive  proof  of  which  is  given  in  tiie  recent  returns  issued 
by  the  Board  of  Trade. 

Statement  by  Mr.  L.  S.  Summers,  organizer  of  the  Amalgamated  Society  of  Telephone  Em- 
ployees, published  in  the  Nottingham,  England,  Guardian,  August  28,  1913: 

Mr.  L.  S.  Summers  declared  emphatically  that  the  conclusions  come  to  by  the  Holt  Committee 
were  entirely  unsatisfactory.  (.Vpplause.)  The  whole  of  the  transferred  staff  were  indignant  at  the 
recommendations  arising  out  of  the  transfer  from  the  National  Telephone  Company  to  the  Post 
Office.  (Hear,  hear.)  The  recommendations  of  the  Select  Committee  meant  an  increase  of  2j/$  hours' 
work  per  week ;  while  as  regarded  pay,  whereas  the  .Amalgamated  Society  submitted  27s.  a  week  as 
a  minimum  living  wage,  the  Select  Committee  recommended  the  miserable  wage  of  26s. — a  disgrace 
to  the  Government  of  the  country.     (Applause.) 

Resolution  of  the  .Amalgamated  Society  of  Telephone  Employees,  published  in  Morning  Post, 
London,  England,  August  27,  1913: 

*  *  '•'  This  mceling  expresses  strong  indignation  at  the  unsatisfactory  recommendations  con- 
tained in  the  report  of  the  Holt  Committee.  We  pledge  ourselves  to  support  the  Executive  Committee 
of  the  A.  S.  T.  E.  in  whatever  action  may  be  deemed  advisable,  but  we  are  also  of  opinion  that  the 
Executive  Committee  should  adopt  a  much  stronger  line  of  action  to  secure  immediate  redress  on 
the  many  grievances  still  existing. 

Resolution  of  the  National  Joint  Committee  of  Post  Office  Employees,  concerning  the  Report 
of  the  Parliamentary  Committee  on  Wages  and  Conditions  of  Service  in  the  Post  Office,  printed  in 
the  Times,  London,  England,  August  23,  1913: 

*  *  *  this  meeting  declines  to  accept  the  report  of  the  Select  Committee  as  a  proper  verdict 
on  its  just  and  moderate  claims.  It  emphatically  states  that  no  juggling  with  pence  will  dispose  of  the 
admitted  increase  in  the  cost  of  living,  and  it  regards  the  proposals  to  increase  the  working  hours  of 
the  staff  under  the  guise  of  a  concession  as  an  insult  to  the  intelligence  of  the  Post  Office  employees. 

Financial  Times,  London,  England,  April  2,  1913: 

Mr.  Jeffreys,  an  official  of  the  Amalgamated  Society  of  Telephone  Employees,  was  called  be- 
fore Mr.  Holt's  Select  Committee  on  Postal  Workers'  Grievances  at  the  House  of  Commons  yester- 
day, and  on  behalf  of  the  staff  of  the  National  Telephone  Company,  taken  over  by  the  Post  Office 
at  the  time  of  the  transfer  of  the  company's  undertaking,  complained  that  the  Government  pledge 
that  no  official  should  suffer  by  the  transfer  had,  in  fact,  been  violated.  Their  prospects  of  promotion 
had,  he  contended,  been  seriously  depreciated. 

68 


Extract  from  a  news  item  in  the  Herald,  Glasgow,  Scotland,  March  22,  1913,  giving  an  accoimt 
of  the  annual  meeting  of  the  Amalgamated  5ocict\  of  Telephone  Employees: 

The  Chairman,  in  his  inaugural  address,  said  that  they  of  the  staff  of  the  olil  National  Tele- 
phone Company  were  now  in  a  position  *  *  *  to  appreciate  the  effect  of  the  many  disadvantages 
under  the  new  conditions  of  service    *    ♦    * 

Future  prospects  of  the  statT  generally,  and  in  particular  the  prospects  of  the  electrical  staff, 
were  of  so  hopeless  a  character  that  many  members  had  already  given  up  the  service  in  disgust.  Those 
who.  owing  to  the  telephone  industry  in  the  United  Kingdom  being  a  State  monopoly,  and  through 
various  circumstances,  must  of  necessity  continue  in  tiu-  employ  of  the  State,  were  working  under 
State  conditions  with  the  iron  of  discontent  searing  into  their  souls.    *    *    * 

The  main  point  so  far  as  the  staff  was  concerned  was  that  State  service  had  been  tried  and 
found  wanting. 

Extract  from  a  resolution  and  comment  thereon  by  Mr.  Thomas  (delegate  for  telephone  em- 
ployees) at  a  meeting  of  the  Birmingham  Trades  Council,  jniblished  in  the  Birmingham,  England, 
Post.  December  9,  1912: 

"This  meeting  of  the  Birmingham  Trades  Council  draws  the  attention  of  the  Postmaster- 
General  to  the  unsatisfactory  condition  of  the  staff  of  the  late  National  Telephone  Company,  parti- 
cularly in  the  matter  of  lower  annual  increment,  lower  lodging  allowance,  overtime  rates,  sick  pay,  and 
lower  maxima  in  the  various  grades,  and  calls  on  him  to  fulfill  his  promise  made  to  the  employees  when 
the  Transfer  Bill  was  in  Committee;  and  maintains  *  *  *  that  the  maimer  in  which  the  telephone 
operators  had  been  treated  is  a  menace  to  progress  which  cannot  be  tolerated." 

In  moving  the  resolution,  Mr.  Thomas  *  *  *  pointed  out  that  the  Postmaster-General  prom- 
ised that  the  employees  should  be  treated  not  only  with  justice  Init  with  generosity.  Mr.  Thomas  gave 
several  instances  of  reductions  sustained  by  telephone  workers.  The  workpeople  had  been  classified 
in  a  disgraceful  manner,  many  of  the  first-class  certificated  operators  having  been  reduced  to  second 
and  third  class. 

From  a  pamphlet  printed  in  1910  by  the  Italian  Postal  Telegraph  Clerks'  Association,  Hon. 
Filippo  Turati,  Member  of  Parliament,  Italy,  President  (translation)  : 

Even  the  foreign  press  has  occupied  itself  with  this  problem  (of  the  telegraph  service),  laugh- 
ing at  us  merrily. 

The  Government,  on  the  other  hand,  has  inverted  things;  pays  less  for  overtime  labor;  has 
done  even  more;  paying  everyone  badly,  it  has  forced  the  workers  to  struggle  amongst  themselves  for 
this  overtime  work,  degenerating  into  "Krumiri."  And  the  Government  is  convinced  that  it  will  win 
much  in  this  affair,  and  will  make  an  excellent  speculation.  The  workers  have  understood,  and 
everyone  knows  that  the  masters  have  nothing  to  gain  by  killing  and  exhausting  the  blood  of  the 
workers.  But  the  government  does  not  yet  understand  these  elementary  matters,  does  not  under- 
stand the  danger  that  accrues  to  industry  from  tired  and  discontented  workers  which  renders  fraud 
inevitable. 

(Foreign — Editorial) 

From  a  letter  from  the  Marquis  de  Montebello,  President  of  the  Association  of  Telephone 
Subscribers,  to  the  Editor  in  Chief  of  Lc  Matin,  Paris,  France,  reprinted  in  the  Bulletin  des  Abon- 
ncs  an  Tele f hone  (Bulletin  of  the  Telephone  Subscribers'  Association),  Paris,  France,  December, 
1913  (translation)  : 

Note  :— Roubaix  ranks  12th  in  population  among  French  cities. 

Permit  me  to  request  the  aid  of  the  wide  publicity  of  the  Matin  to  call  attention  to  the  truly 
scandalous  conditions  under  which  the  postal,  telephone  and  telegraph  services  operate  at  Roubaix. 
*  *  *  I  shall  speak  to  you  only  of  the  telephone  service,  adding,  however,  that  the  postal  and  tele- 
graph services  are  no  better  organized. 

69 


The  solitary,  narrow  staircase  which  serves  the  various  floors  is  repulsively  filthy  and  falling 
into  ruins.  The  tottering  railing  is  altogether  lacking  in  several  places.  The  rooms  reserved  for  the 
various  services  are  in  the  same  state  of  dilapidation ;  the  walls  have  not  been  painted  or  papered  for 
several  decades ;  the  floors  are  rotten  and  enormous  holes  open  up  under  one's  feet ;  the  ceilings  are 
falling  down  and  must  be  supported  by  timber  braces  and  by  props. 

These  ridiculously  confined  quarters  are  arranged  in  a  manner  contrary  to  the  most  elemental 
laws  of  hygiene  and  of  comfort;  one  roasts  in  them  in  summer;  one  freezes  in  winter;  the  atmosphere 
is  not  fit  to  breathe;  the  arrangement  of  the  furniture  does  not  permit  the  removal  of  the  dust  that 
has  accumulated  for  years;  a  single  little  door  serves  as  an  exit  for  about  fifty  employees;  no  measure 
of  precaution  has  been  taken  against  a  conflagration,  which  is  always  imminent,  unless  the  presence  of 
a  bucket  of  water  can  be  regarded  as  such  a  precautionary  measure.  This  bucket,  however,  also 
serves  as  a  washstand  for  the  whole  stafif  of  employees ! 

From  a  speech  delivered  at  Tourcoing,  France,  by  the  Marquis  de  Montebello,  the  President  of 
the  Association  of  Telephone  Subscribers,  printed  in  the  Bulletin  de  I' Association  des  Abonnes  au  Tele- 
phone (Bulletin  of  the  Telephone  Subscribers'  Association),  Paris,  France,  December,  1913  (trans- 
lation) : 

Note: — Roubaix  ranks  twelfth  in  population  among  French  cities. 

The  lecturer  speaks  of  the  visit  which  he  made  during  the  morning  to  the  telephone  exchange  at 
Roubaix,  which  serves  Roubaix  and  Tourcoing.  "I  saw  there,"  says  he,  "a  prehistoric  installation ; 
the  old  shelf-switchboard,  which  has  been  abandoned  abroad  for  nearly  thirty  years,  is  still  in  use 
there.  The  offices  are  arranged  under  conditions  contrary  to  all  the  principles  of  hygiene  and  even  to 
simply  humanitarian  principles.  It  is  disgraceful,  ignoble,  inhuman.  If  a  business  man  had  such  offi- 
ces, the  labor  inspector  would  have  them  closed  immediately.  In  the  most  barbarous  countries,"  he 
adds,  "employees  are  not  treated  as  at  the  exchange  at  Roubaix."  He  mentions  in  particular  that, 
for  their  only  wash-stand,  they  have  an  old  zinc  bucket  in  which  they  have  had  to  stop  up  a  hole  with 
plaster. 

From  the  Civil  Service  Gazette,  London,  England,  October  18,  1913,  referring  to  criticism  by 
L.  G.  Chiozza  Money,  M.  P.,  concerning  recommendations  of  the  Holt  Committee  on  Post  Office 
Servants  (Wages  and  Conditions  of  Employment)  : 

*  *  *  Mr.  Chiozza  Money  is  a  supporter  of  the  Government,  but  he  does  not  mince  matters. 
He  states  quite  plainly  that  the  argument  used  by  the  Committee,  and  concurred  in  by  the  Secretary 
of  the  Post  Office  (i.  e. — that  the  Post  Office  has  no  difficulty  in  securing  employees  at  the  wages  it 
offers) — is  the  argument  which  is  used  by  every  "bad"  employer. 

He  thus  asserts  that  the  Post  Office  is  a  bad  employer.  We  do  not  dispute  the  truth  of  this 
assertion.  The  Post  Office  is  a  bad  employer,  and  yet  the  Post  Office  is  one  of  the  most  important 
parts  of  the  machinery  controlled  by  a  State  which  claims  to  be  "the  model  employer." 

The  Electrician,  London,  England,  August  15,  1913: 

The  condition  of  affairs  at  the  present  moment  is  much  more  serious  from  the  engineering 
aspect,  for  we  understand  that  so  numerous  have  been  the  resignations  from  among  the  engineering 
members  in  what  we  may  term  the  "National  Telephone  section"  of  the  staff  that  those  in  authority 
are  becoming  greatly  concerned.  *  *  *  The  reasons  for  the  defection  are  alleged  to  be  that  the  en- 
gineering staff  generally  is  dissatisfied  with  the  conditions  in  their  particular  branch  of  the  State  serv- 
ice, not  so  much  from  the  pecuniary  side  (though  there  is  discontent  on  that  score),  but  because  of  the 
lassitude  and  absence  of  "momentum"  which  confronts  them  and  seems  to  pervade  the  very  atmo- 
sphere. These  men  feel  that  promotion  is  blocked  for  years  to  come,  and  that  what  little  advancement 
they  may  hope  to  gain  will  be  determined  by  seniority  in  the  service  rather  than  by  their  engineering 
qualifications.  They  feel  that  any  initiative  or  foresight  they  possess  is  of  no  use  to  them,  while  their 
work  is  rapidly  losing  that  absorbing  interest  it  once  had  for  them.  The  result  is,  we  learn,  that  the 
best  of  the  juniors  are  rapidly  leaving  the  service,  while  the  seniors  of  the  old  service,  for  whom  the 

70 


task  of  obtaining  other  employment  is  more  difficult,  are  tending  to  become  slack  and  inert  through 
the  depression  of  their  surroundings. 

The  Telegraph  Chronicle  and  Chnl  Sennce  Recorder,  London,  England.  July  18,  1913: 

The  better  pay  and  prospects  offered  by  cable  companies  have  been  instrumental  in  depleting 
BM.  (telegraphic  code  for  Birmingham)  of  two  capable  juniors  »  *  •  who  have  shaken  the  dust 
of  the  local  telegraph  office  off  their  feet  and  started  with  the  Eastern  Company  at  a  commencing  sal- 
ary of  no  less  than  8s.  per  week  in  advance  of  what  they  were  receiving  from  the  what-ought-to-be- 
but-aint  model  employer,  and  with  the  assurance  of  an  annual  increment  worth  the  having  and  a  max- 
imum such  as  would  positively  cause  the  death  of  some  of  our  noble  administrators  if  it  were  suggested 
to  them  that  Government  employees,  doing  the  same  work,  should  have  a  chance  to  attain. 

The  Northern  Whig,  Belfast,  Ireland,  March  22,  1913: 

We  publish  this  morning  some  very  interesting  and  important  statements  made  yesterday  by 
Mr.  Preston,  president  of  the  annual  Conference  of  Telephone  Employees.  According  to  his  remarks, 
the  whole  telephone  staff  are  simply  disgusted  with  the  conditions  of  service  under  the  Government. 

The  Glasgow,  Scotland,  Herald,  March  22,  1913: 

*  *  *  The  State  on  the  first  serious  attempt  on  a  large  scale  to  buy  up  and  manage  a  public 
utility  has  failed  to  demonstrate  that  it  is  a  model  employer.  The  Goverinnent  telephonist  is  worse  off 
than  he  was  when  he  worked  for  a  private  employer,  whose  first  concern  was  to  earn  a  dividend. 

Article  by  the  Parliamentary  Correspondent  of  the  Daily  Herald,  Glasgow,  Scotland,  reporting 
a  meeting  of  the  Telephonists'  Branch  of  the  Postal  Telegraph  Clerks'  Association,  published  January 
22,  1913: 

Mr.  \\'.  J.  Ash:  *  *  *  men  who  have  to  be  experts  in  their  profession,  who  work  on  con- 
tinuous and  extremely  responsible  night  duty,  have  the  paternal  incentive  to  good  work  of  a  maxi- 
mum salary  of  30s.  a  week.   *   *   * 

Increditable  as  it  may  seem,  these  men  have  not  even  been  established  at  a  regular  post  office 
rating.  That  is,  their  job  is  considered  a  sort  of  superior  blind  alley,  and  they  are  as  good  as  shown 
the  door  after  ten  years'  faithful  service. 

Manchester,  England,  Evening  Chronicle,  December  11,  1912: 

That  the  employees  of  the  National  Telephone  Company  are  anything  but  satisfied  with  their 
experiences  since  becoming  State  servants  is  indicated  by  the  fact  that  a  protest  meeting  on  their 
behalf  is  being  called  this  week  in  Manchester.  The  "ideal  employer"  is,  in  many  cases,  demanding 
lower  wages  and  longer  hours  than  the  old  company  found  necessary  to  successfully  work  the  system. 
The  company's  employees  also  have  another  legitimate  grievance.  When  they  were  taken  over  promo- 
tion was  promised  on  the  basis  of  work  done,  but  despite  the  fact  that  they  had  had  in  their  hands 
an  overwhelming  proportion  of  the  telephone  exchanges  and  lines  throughout  the  country  very  few 
of  the  superior  positions  have  been  given  to  them.  *  *  *  Here,  again,  we  have  an  example  of  broken 
promises  and  favoritism  unworthy  of  this  "model  employer,"  *  *  *  Neither  are  the  public  any  better 
pleased  with  the  change,  and  the  net  result  of  the  transfer  has  been  another  proof  of  the  unsatisfac- 
tory character  of  the  much-vaunted  State  Services. 

Manchester,  England,  Evening  Chronicle,  December  11,  1912: 

It  is  customarj-  for  a  certain  class  of  writers  and  speakers  to  hold  up  the  State  as  the  ideal  em- 
ployer. *  *  *  But  it  is  well  known  that  Post  Office  workers  have  many  real  grievances  which  they 
cannot  get  remedied,  and  now  it  appears  that  the  vagaries  of  State  management  are  causing  seething 
unrest  in  the  Labor  Exchanges  and  the  Telephone  Service.  The  grievances  in  both  cases  appear  to  be 
quite  legitimate,  and  they  are  bad  enough  to  bring  about  organized  effort  to  secure  readjustment  of 
conditions.  Under-payment  for  the  work  done  and  preferential  treatment  in  regard  to  promotions  are 
the  chief  causes  of  complaint  in  both  cases. 

71 


Leeds,  England,  Mercury,  November  15,  1912: 

A  memorial  submitted  to  the  Postmaster-General  on  behalf  of  the  telephone  employees  sets 
out  that  grave  unrest  exists  amongst  the  staff  all  over  the  countrj-,  particularly  amongst  those  em- 
ployees who  have  been  taken  over  from  the  National  Telephone  Company's  staff. 

************ 

The  chief  allegations  are  that  the  men  and  women  employees  are  considerably  worse  off  with 
respect  to  ordinary,  overtime,  and  Sunday  pay,  sick  pay  (reduced  by  one-third  in  the  case  of  non-es- 
tablished employees),  and  persons,  while  hours  are  longer  in  nearly  every  case. 

Pall  Mall  Gazette  (.London,  England),  November  13,  1912.     Article  by  Filson  Young: 

A  little  light  was  thrown  for  me  the  other  day  on  the  mysterious  cause  of  the  inefficiency  of 
the  telephone  service.  I  was  talking  to  a  linesman  as  he  ate  his  dinner  outside  one  of  those  curious 
little  combinations  of  tents  and  caves  which  establish  themselves  for  an  hour  or  two  at  the  corners 
of  London  streets. 

I  asked  him  why,  if  the  same  staff  had  worked  the  system  under  the  National  Telephone  Com- 
pany, they  could  not  do  so  with  equal  efficiency  under  the  Government.  "It  is  quite  true,"  he  said,  "it 
is  the  same  staff,  but  the  conditions  aren't  the  same.  Our  pay  remains  the  same,  but  our  conditions 
are  less  good.  All  our  old  arrangements  have  been  knocked  out  and  no  new  ones  put  in  their  place. 
Take  my  case.  Under  the  National  Telephone  Company  I  could  have  gone  on  being  promoted  until 
I  became  a" — I  forget  what.  "Now  I  can  only  go  on  to  such  and  such  a  grade,  at  thirty-five  shillings 
a  week.   *   *   * 

"Now,"  added  my  friend,  as  he  prepared  to  descend  again  into  the  cave,  "a  few  people  feeling 
like  that  in  a  service  make  no  dift'erence.  But  when  you  get  thirty  or  forty  thousand  people  all  dis- 
satisfied and  all  discouraged — well,  the  service  is  bound  to  suffer.     It  stands  to  reason,  don't  it?" 

Birmingham,  England,  Post,  November  2,  1912: 

Widespread  discontent  has  prevailed  among  tclei)hone  employees  since  the  transfer  of  the  service 
to  the  State,  and  meetings  are  being  held  throughout  the  country,  under  the  aegis  of  the  Amalga- 
mated Society  of  Telephone  Employees.  Grievances,  it  is  said,  are  felt  in  practically  every  department 
of  the  service,  but  they  are  declared  to  be  more  acute  in  the  electrical  and  engineering  sections.  These 
departments  were  considered  by  the  Post  Office  authorities  to  be  unworthy  of  a  proper  grade,  and  a 
large  number  of  the  employees  were  classified  as  "unestablished  workmen."  Emphasis  is  laid  on  the 
fact  that  although  the  men  in  this  department  are  qualified  electricians,  and  that  many  of  them  have 
passed  examinations  and  gained  certificates,  in  some  cases  in  the  provinces  the  rate  of  pay  has  been 
Sj.'jd.  and  6d.  an  hour.  Some  of  these  engaged  in  these  sections  receive  29s.  3d.  per  week,  but  the 
average  is  considerably  below  that  earned  before  the  transfer. 

It  is  further  declared  that  the  majority  of  the  employees  have  to  work  longer  hours,  while  the 
rate  of  pay  for  overtime  and  Sunday  work  has  been  reduced;  sick  pay  has  also  been  reduced  to  two- 
thirds  in  the  case  of  unestablished  workmen,  and  pension  benefits  have,  as  the  result  of  the  lack  of 
classification,  been  abolished  in  many  instances. 

John  Bull  (British  weekly  published  by  Horatio  W.  Bottoniley,  M.  P.),  September  28,  1912: 
Is  it  not  a  puzzle  that  everybody  is  complaining  since  the  telephones  were  taken  over  by  the 
State?  The  same  staff  is  employed,  and  there  is  no  apparent  reason  why  it  should  behave  differently. 
Now  the  unseen  fact  in  connection  with  the  Post  Office  telephones  is  that  the  whole  staff'  is 
a  seething  mass  of  discontent.  *  *  *  Work,  pay,  prospects,  sick-leave,  pensions — in  fact,  all  the  es- 
sentials of  their  careers — remain  unsettled,  and  it  is  not  to  be  wondered  at  if  the  strain  on  their  minds 
interferes  with  their  alacrity  and  good  temper. 

************ 

The  result  of  all  this  chaos  and  pin-pricking  is  that  men  go  about  listlessly,  and  their  overseers, 
being  also  disheartened,  feel  no  call  to  remonstrate.   ♦   *   *   The  men  are  loth  to  strike,  but  they  feel 

72 


that  they  have  been  very  badly  treated  and  that  they   would   be   perfectly    justified    in    taking   strong 
measures  to  secure  their  rights. 

(.4merican — Official) 

Congressional  Record.  January  19,  1914,  page  2018: 

Mr.  Beakes:  *  *  *  The  fault  with  the  civil-service  system,  as  1  view  it,  is  that  when  a 
man  gets  in,  after  a  few  slight  and  immaterial  promotions,  there  is  nothing  ahead.  In  Inisiness  cir- 
cles, outside  the  Goveniment  service,  a  man  begins  down  in  the  ranks  and  he  is  spurred  on  by  the 
knowledge  that  if  he  shows  unusual  knowledge,  skill,  efficiency,  or  capacity,  there  is  almost  no  limit 
as  to  how  far  up  the  ladder  he  may  climb.  There  is  always  something  ahead  for  him.  Rut  in  the 
civil  service,  after  one  or  two  rungs  of  the  ladder,  there  is  a  blank  wall  and  nothing  ahead. 

Congressional  Record,  January    16,   1914,  page  1826: 

Mr.  Griffin:  *  *  *  The  employees  in  the  Postal  Service,  and  particularly  the  city  and 
rural  carriers,  post-office  clerks,  and  laborers,  are  i)aid  only  for  the  actual  time  they  are  employed. 
When  overtaken  by  sickness  or  if  they  meet  with  an  accident  and  become  incapacitated  for  duty  their 
pay  ceases  at  once.  It  matters  not  if  an  accident  was  caused  by  the  grossest  negligence  on  the  part  of 
the  Government,  these  employees  have  no  redress  for  damages,  not  even  for  the  loss  of  salary.  They 
are  laid  off  without  pay  until  they  are  able  to  assume  their  official  duties,  and  should  the  sickness  or 
accident  be  of  a  nature  to  confine  them  for  a  period  of  more  than  150  days  they  are  notified  to  hand 
in  their  resignation,  because  a  department  rule  provides  that  no  employee  will  be  excused  for  a  longer 
period,  no  matter  what  the  cause  may  be. 

Congressional  Record,  Januarj'  16,  1914,  page  1826: 

Mr.  Griffin  :  *  *  *  It  has  been  stated  that  the  personnel  of  the  Postal  Service  changes 
every  seven  years,  and  this  will  give  an  idea  of  the  small  percentage  of  those  who  do  make  it  their 
life  work.  And  now,  Mr.  Chairman,  what  is  the  reward  for  these  men  and  women  who  give  the  best 
>ears  of  their  lives  to  the  public  service?  Well,  it  is  hard  for  me  to  say  it,  because  I  detest  ingrati- 
tude, governmental  or  otherwise,  these  employees  are  forced  to  resign  when  they  become  superannu- 
ated, unceremoniously  kicked  out,  and  told  that  they  are  inefficient  and  can  no  longer  do  the  work  re- 
quired of  them — outlived  their  usefulness.  It  is  one  of  the  saddest  incidents  of  our  governmental  life. 
Thrown  out  with  the  flotsam  and  jetsam  of  humanity  who  have  no  aim  or  object  in  life,  because  years 
of  ardent  labor  have  used  up  their  energy  and  vitality.  Yes,  Mr.  Chairman,  like  an  obsolete  piece  of 
machinery  or  a  broken  piston  rod,  they  are  thrown  on  the  scrap  heap. 

Congressional  Record,  January  16,  1914,  page  1846: 

Mr.  Reilly:  *  *  *  It  was  not  until  I  became  a  member  of  this  body  that  I  learned  that 
old  worn-out  letter  carriers  and  other  superannuated  employees  of  the  Government  were  not  retired 
on  part  pay,  but,  on  the  contrary,  were  dismissed  from  the  service  when  they  could  no  longer  keep 
up  the  pace.  One  of  the  first  letters  I  received  after  being  elected  a  Member  of  Congress  was  from 
an  old  postal  employee,  who  had  received  an  official  notice  from  his  postmaster  informing  him  that 
he  had  been  off  duty  the  allotted  number  of  days  in  the  year  allowed  by  the  department  and  that  his 
resignation  would  be  accepted.  The  simple  statement  of  that  heart-broken  man  asking  me  to  assist  in 
having  him  kept  on  the  rolls  made  my  heart  ache.  He  had  spent  34  years  of  his  life  pounding  the 
pavements  in  all  kinds  of  weather  and  at  all  hours  of  the  day  and  night,  and  was  known  and  loved  by 
the  citizens  of  the  community  he  served,  composed  of  all  classes  and  creeds  and  political  affiliations. 
He  had  not  only  given  the  best  years  of  his  life  to  the  Government  in  building  up  the  Postal  Service,  but 
was  at  an  age  and  in  such  a  condition  that  he  could  not  hope  to  find  cmi)loyment  of  any  kind.  He 
was  in  such  financial  straits  that  if  thrown  on  the  world  he  would  have  to  depend  on  the  bounty  of 
relatives  or  friends,  or  else  become  a  public  charge. 

What  a  cruel,  cruel  fate  to  leave  a  man  to  who  had  lived  an  honorable,  upright  life  and  was  a 
model  citizen.     Why,  Mr.  Chairman,  if  this  man  had   worked    for  a   railroarl  company  or  a  banking 

73 


institution  or  a  large  corporation  of  any  kind,  and  was  treated  in  such  a  manner,  it  would  be  the 
subject  of  public  condemnation.  But  being  a  life-long  employee  of  the  Government  no  one  seems  to 
take  more  than  a  passing  interest  in  him.  We  legislate  here  to  curb  the  trusts  and  the  railroads  and 
corporations,  and  denounce  them  as  soulless,  but  I  believe  it  would  be  well  for  us  to  reflect  and  take 
a  few  leaves  from  the  book  of  rules  which  govern  them  in  their  treatment  of  their  employees. 

Congressional  Record,  January  16,  1914,  page  1846: 

Mr.  Reilly:  *  *  *  i  believe  the  Government  is  the  poorest-paying  employer  in  the  world, 
and  I  say  that  intending  to  include  therein  all  branches  of  the  service  from  the  man  who  receives 
$800  to  the  man  who  receives  $8,000.  I  believe  that  the  same  service  with  the  same  ability,  the  same 
intelligence,  the  same  faithfulness  given  to  this  Government  if  given  to  a  private  corporation  would 
receive  in  reward  double  the  pay  on  an  average  that  the  Government  pays  to-day. 

New  York  Press,  December  8,  1913 : 

Poor  pay  in  the  Government  service  is  sending  many  scientific  experts  outside  for  employment, 
says  George  Otis,  Director  of  the  United  States  Geological  Survey,  in  his  annual  report,  made  public 
to-day. 

In  the  last  four  and  a  half  years  forty-one  geologists  have  left  the  Government,  primarily  to 
better  their  financial  condition.  The  salaries  they  received  from  corporations  averaged  nearly  two 
and  one-half  times  the  salaries  paid  them  by  the  Geological  Survey,  says  the  Director. 

Statement  by  George  von  L.  Meyer,  former  United  States  Secretary  of  the  Navy,  as  reported 
in  an  article  published  in  the  Sunday  Magazine  of  the  New  York  Tribune,  February  2,  1913: 

I  hope  to  see  the  prominent  and  successful  men  in  public  life  in  this  country  in  the  future 
look  for  private  secretaries  among  college  graduates,  because  in  that  way  they  can  find  men  specially 
prepared  and  equipped.  But  there  can  be  no  doubt  of  the  fact  that  the  great  majority  of  government 
salaries  are  inadequate  and  that  they  are  not  particularly  attractive  to  ambitious  and  energetic  young 
men  who  are  capable  of  great  things. 

Statement  by  Mcnry  L.  Stimson,  former  United  States  Secretary  of  War,  as  reported  in  an 
article  published  in  the  Sunday  Magazine  of  the  New  York  Tribune,  February  2,  1913: 

The  purely  monetary  rewards  and  opportunities  of  the  government  will  never  be  so  great  as 
those  offered  in  the  business  and  professional  world  elsewhere ;  and  if  the  government  service  is  to 
be  maintained  upon  a  high  and  increasing  level  of  proficiency,  it  must  meet  competition  from  other 
quarters  by  some  compensating  features  that  will  attract  the  best  talent  to  its  service  and  retain  it. 

Statement  by  John  C.  Black,  former  President  of  the  United  States  Civil  Service  Commission, 
as  reported  in  an  article  in  the  Sunday  Magazine  of  the  New  York  Tribune,  February  2,  1913: 

Government  employees  who  make  good  in  scientific  work,  and  even  in  clerical  and  executive 
work  for  the  government,  can  always  command  better  salaries  outside  the  public  service,  and  outside 
corporations  are  constantly  looking  for  such  men  who  have  shown  special  efficiency. 

Article  in  the  New  York  Tribune,  Sunday  Magazine  Section,  February  2,  1913: 

The  son  of  a  particular  friend  of  Charles  Nagel,  Secretary  of  Commerce  and  Labor,  came  to 
him  two  years  ago  and  asked  him  for  a  job. 

"I'll  give  you  this  job,"  said  Mr.  Nagel ;  "but,  in  return  for  it,  I  want  your  solemn  promise  that 
twelve  months  from  to-day  you  will  lay  your  resignation  upon  my  desk.  In  that  way  you  will  make 
sure  of  not  hopelessly  burying  yourself." 

The  young  man  kej)!  his  promise,  resigned  at  the  end  of  the  year,  and  a  little  later  secured  a 
good  position  in  private  life,  one  carrying  the  assurance  that,  if  he  worked  hard,  he  would  go  higher 
and  higher  in  the  business. 

In  a  vein  similar  to  Mr.  Nagel's,  Champ  Clark,  Speaker  of  the  House  of  Representatives,  once 
said  to  a  young  man  from  his  district,  "My  boy,  you  can  do  better  for  yourself  by  going  back  to  the 

74 


woods  at  home  and  mauling  rails  than  by  taking  a  clerkship  under  the  government.    You'll  get  no  job 
from  me." 

Statement  by  Frank  H.  Hitchcock,  Former  Postmaster  General  of  the  United  States,  as  re- 
ported in  an  article  published  in  the  Sunday  Magazine  of  the  New  York  Tribune,  February  2,  1913: 

He  who  intends  to  make  his  work  for  the  government  a  life-work  must  decide  to  endure  great 
sacrifices  financially.  After  a  man  has  reached  or  passed  a  certain  degree  of  efficiency  and  responsi- 
bility in  the  service,  he  finds  that  he  gets  less  money  for  it,  far  less  money,  than  is  paid  by  business 
concerns  for  relatively  the  same  work.  I'  should  say  that  he  discovers  that  he  is  working  for  at  least 
one-fourth,  perhaps  one-fifth,  of  what  he  could  be  making  on  the  outside.  And  this  is  specially  true 
because  a  man  who  does  responsible  work  for  the  government  is  part  of  the  biggest  business  concern 
in  the  world.  He  has  to  learn  how,  and  know  how,  to  handle  tremendous  problems,  to  become  a 
trustworthy  part  of  the  gigantic  system.  He  is  taught  to  develop  and  exercise  his  judgment,  and  his 
self  reliance  must  necessarily  increase  as  he  discharges  his  duties.  Nevertheless,  with  all  this  equip- 
ment and  ability,  his  salary  does  not  rise  proportionately.  He  recognizes  that  he  could  be  making  more 
money  in  other  lines  of  endeavor. 

(A  merican — Editorial) 

From  an  article  reprinted  in  the  Congressional  Record,  October  31,  1913,  pp.  6517  fT: 
To  have  and  to  hold  a  Federal  position  in  Washington  is,  in  most  instances,  to  mortgage  one's 
better  prospects  and  potentialities  in  the  boundless  world  of  independent  endeavor  for  the  temporary 
possession  of  a  place  easy  to  fill  and  the  rewards  of  which  allure  because  they  are  never  disappointing 
in  their  regularitj\ 

********♦♦»♦ 

Working  for  Uncle  Sam,  which  at  first  is  a  vocation,  oftentimes  becomes  a  disease,  and  an  in- 
curable one.  The  saddest  plaint  one  ever  hears  in  Washington — sadder  than  the  wail  of  the  rejected 
office  seeker — is  that  of  the  helpless  and  hopeless  Government  clerk  lamenting  his  unhappy  lot.  He  re- 
alizes that  he  is  "in  bad,"  and  yearns  for  one  more  chance  to  right  himself.  He  is  in  the  net  and  can 
not  escape.  He  should  like  to  extricate  himself,  but  that  is  impossible.  Perhaps  his  head  has  whit- 
ened and  his  hands  have  palsied  in  the  service,  and  his  years  of  steady  employment  are  unrepresented 
by  a  dollar  saved.     His  fate  is  sealed. 

The  departments  of  Washington  teem  with  professional  men  who  are  afraid  to  cut  loose  from 
a  sure  thing  with  the  Government,  be  it  ever  so  humble,  to  trj  earning  a  livelihood  at  the  thing  for 
which  they  are  better  adapted  or  for  which  they  have  qualified  after  years  of  preparation ;  but  they 
have  shrunk  into  moral  and  intellectual  cowardice.  Conscious  of  strength  for  higher  altitudes,  they 
Strain  and  fret  in  the  denser  atmosphere  of  the  monotonous  plains  of  Government  life  in  Washington. 
It  is  pathetic  to  behold  them — a  struggling,  heartless,  hopeless  mass. 

************ 

Then  there  is  the  reconciled  class  of  Government  clerks,  made  up  of  those  who  are  content  to 
drift  with  the  current  of  clerical  routine.  They  are  pursuing  the  lines  of  least  resistance.  The  Gov- 
ernment gait  is  easy-going — no  hurrying,  no  rushing,  very  humane  hours,  30  days'  vacation,  30  days' 
sick  leave,  two  pay  days  in  each  month.  "Oh,  what's  the  use  of  kicking?  Pretty  soft,  this,  after 
all.  Guess  I  will  stick  it  out."  So,  in  course  of  time,  the  reconciled  clerk  is  lost  in  the  great  ag- 
gregate. 

************ 

Certainly  there  are  hundreds  in  the  Government  service  in  Washington  that  make  good,  just 
as  there  are  hundreds  who  could  not  earn  as  much  compensation  for  their  labor  in  any  other  field. 
But  there  is  a  lamentable  disproportion  between  those  who  raise  themselves  above  the  level  of  medio- 
crity and  those  who  never  detach  themselves  from  the  undistinguished  mass.    When  one  clerk  climbs 

75 


to  the  loftiest  peaks  in  the  mountainous  range  of  successful  endeavor,  50  never  see  over  the  heads  of 
those  that  make  up  the  army  on  the  plains  below. 

************ 

The  percentage  of  young  men  who  have  used  a  position  in  the  departments  of  Washington  as 
a  stepping  stone  to  higher  things  is  pitiably  small.  Of  course,  some  have  "graduated"  from  the  de- 
partments to  places  out  in  the  world,  where  their  departmental  experience  was  converted  into  a  posi- 
tive help,  but  the  number  who  have  so  succeeded  forms  a  sad  and  disheartening  contrast  with  the  over- 
whelmingly larger  number  that  have  entered  the  departments  in  Washington  only  to  remain  in  ob- 
scurity. 

Saturday  Evening  Post,  September  13,  1913: 

Federal  salaries  have  not  been  systematically  revised  during  all  the  years  when  cost  of  living 
has  been  steadily  rising.  One  soulless  corporation  after  another  has  adopted  a  pension  scheme  for  its 
employees.  The  Government  has  none.  From  the  insufficient  data  at  hand  it  is  calculated  that  some- 
thing like  ten  thousand  injuries  to  Federal  employees  rise  ever)'  year  from  industrial  accidents ;  and 
in  compensating  the  victims  the  Government  lags  much  behind  the  standards  that  the  people  through 
legislative  action  have  enforced  upon  private  employers. 

************ 

Doctor  Rubinow  reports  in  The  Survey  seventeen  fatalities  and  a  hundred  and  twenty-four  in- 
juries in  the  rural  mail  delivery  service,  and  eight  fatalities  and  four  hundred  and  forty  injuries  in 
city  mail  delivery — for  none  of  which  was  a  cent  of  compensation  paid.  Altogether  he  mentions  six- 
teen hundred  injuries,  three  hundred  and  ninety  of  them  fatal,  without  compensation ! 

On  a  like  record  from  the  Steel  Trust,  the  halls  of  Congress  would  ring  with  denunciation — 
which  illustrates  again  that  the  Government,  though  very  free  with  advice  to  others,  will  not  conduct 
its  own  business  decently. 

Leslie's  Weekly,  March  6,  1913: 

There  are  many  *  *  *  able,  experienced  public  servants  *  *  *  who  will  have  to  drop  out 
because  of  the  change  in  administration  at  Washington.  Their  retirement  means  a  positive  loss  in 
dollars  and  cents  to  the  government.  It  is  a  costly  piece  of  business  to  train  new  men.  Too  great  a 
proportion  of  our  ])ublic  officers  are  content  to  l)e  rubber  stamps. 

From  address  by  Professor  Thomas  H.  Reed,  of  the  University  of  California,  at  the  Fifteenth 
Annual  Convention  of  the  League  of  California  Municipalities,  published  in  Pacific  Municipalities, 
February  1,  1913: 

Herein  lies  the  inferiority  of  our  public  service  to  that  of  other  countries  where  merit  appoint- 
ment and  good  behavior  tenure  prevail  for  all  offices,  and  to  the  service  of  private  corporations  whose 
self  interest  rigidly  forces  into  power  men  broadly  trained  and  tested  by  experience.  We  carefully 
select  a  clerk  in  the  assessor's  office,  whose  only  duty  is  to  drive  a  pen,  by  competitive  examination, 
and  then  give  the  responsible  work  of  the  assessor  to  an  amateur. 

The  Evening  Sun,  New  York,  Jaiuiary  30,  1913: 

*  *  *  Joseph  Powers,  who  works  at  Station  P,  which  is  situated  in  the  Produce  Exchange, 
hurt  his  back  and  was  laid  up  for  eleven  weeks  when  an  iron  stool  on  which  he  was  working  sorting 
mail  collapsed.  Powcrs's  pay  stopped  the  instant  he  struck  the  floor.  .Ml  the  money  he  got  while  he 
was  off  duty  was  $8  a  week,  which  he  received  from  the  New  York  Letter  Carriers'  Association. 


POLITICAL  ASPECT 
(Foreign — Official) 

Extract  from  Minutes  of  Evidence,  Second  Report  of  the  Royal  Commission  on  Civil  Estab- 
lishments, presented  to  British  Parliament,  1888: 

Sir  Thomas  Henry  Farrer,  Bart*.,  called  and  examined. 

20.012.  *  *  *  There  is  a  certain  difficulty  in  the  softheartedness  of  heads  of  departments 
and  of  ministers.  But  there  is  a  very  much  greater  difficulty  in  the  pressure  which  is  put  upon  them 
by  members  of  the  House  of  Commons.  That  is  the  real  difficulty;  the  real  difficulty  of  the  public 
service  is  getting  rid  of  bad  men,  and  the  real  tlifficulty  ol  getting  rid  of  bad  men  is  that  no  minister 
will  face  the  pressure  which  is  put  upon  him  from  outside. 

20.013.  {Mr.  Hanbury.)  Have  you  had  much  personal  experience  of  that? — Yes,  1  have,  be- 
cause I  have  been  plagued  all  my  life  at  the  Boanl  of  Trade  with  inefficient  men  that  I  wanted  to  get 
rid  of,  but  have  beeii  unable  to  do  so. 

Debate  in  the  House  of  Commons  on  the  Telegraph  (Money)  Bill  {Loudon  Times,  June  29, 
1907): 

Mr.  Buxton,  Postmaster  General :  When  the  charge  was  made  against  the  Post  Office  of  carry- 
ing on  a  telegraph  service  at  a  loss  his  withers  were  unwrung.  The  blame  should  really  fall  on  the 
shoulders  of  the  House  of  Commons,  to  whom  he  would  say,  if  he  could  address  it  as  an  individual, 
"Thou  art  the  man  ;•'***  He  thought  it  was  only  fair  to  the  Post  Office,  and  it  might  be  rather 
advantageous  to  the  House,  that  they  should  know  who  was  the  real  culprit.  It  was  not  the  Post 
Office,  but  the  House  of  Commons.     Unfortunately  there  it  stood. 

♦  **♦***♦***♦ 

Mr.  Austen  Chamberlain:  Said  *  *  *  he  did  not  think  that  when  it  (the  Post  Office) 
undertook  a  commercial  business  it  should  run  it  at  a  loss,  and  he  could  not  see  why  in  matters  of 
this  kind  the  tax  payer  should  be  expected  to  provide  a  service  for  the  minority  who  used  it  without 
exacting  in  return  some  reward  beyond  the  bare  interest  or  sinking  fund  of  the  capital. 

Hansard's  Parliamentary  Debates,  July  6,  1905,  pp.  1350  ff.: 

Lord  Stanley  (Postmaster-General)  said  the  demands  made  by  employees  generally  before  the 
Bradford  Committee,  with  the  pay  of  all  the  supervising  classes  raised  in  proportion  would  have  meant 
the  payment  from  the  Exchequer  of  no  less  than  £2,500,000  a  year.  He  was  entitled  to  ask  when 
was  this  to  cease.  Honorable  Members  knew  better  than  he  how  they  were  being  bombarded  with 
applications  from  Post  Office  employees  and  other  classes  of  Civil  Servants  for  increases  of  wages. 
This  had  taken  a  form  which  was  not  illegal,  but  which  he  could  not  help  thinking  was  an  abuse  of 
their  rights,  to  wit,  the  form  of  a  political  threat.  They  had  circulated  an  appeal  in  which  they  ex- 
pressed very  clearly  and  very  frankly  their  intention,  and  it  was  one  of  which  the  Committee  would 
have  to  take  note  now,  or  it  would  be  much  worse  in  the  future  *  *  *  it  was  abusing,  as  it  seemed 
to  him,  their  rights  as  voters.  It  was  nothing  more  nor  less  than  blackmail.  It  was  nothing  more 
nor  less  than  asking  Members  to  purchase  votes  for  themselves  at  the  General  Election  at  the  expense 
of  the  Public  Exchequer.  Both  sides  would  have  to  make  up  their  minds  that  some  means  should  be 
devised  by  which  there  should  not  be  this  continual  blood-sucking  on  the  part  of  the  public  servants. 

From  "The  British  State  Telegraphs,"  by  Hugo  R.  Meyer,  1907,  pp.  133-4: 
Before  the  Postmaster  General  had  introduced  into  Parliament  his  scheme  for  improving  the 
positions  of  the  telegraphists,  sorting  clerks  and  postmen,  Lord  Frederick  Cavendish,  in  his  position  as 

•Served  as  Permanent  SccreUry  of  the  Britiih  Board  of  Trade  from  1867  to  1886,  and  a»  member  of  the  Playfair  Commis- 
sion  on   the  Civil  Service,   1876. 

77 


Financial  Secretary  of  the  Treasury,  had  written  the  Postmaster  General  as  follows ;  *  *  *  "The 
persons  who  are  affected  by  the  change  now  proposed  are,  as  you  observe,  no  fewer  than  10,000,  and 
the  entire  postal  service  numbers  nearly  five  times  as  many.  Other  branches  of  the  Civil  Service  em- 
ployed and  voting  in  various  parts  of  the  United  Kingdom,  are  at  least  as  numerous  in  the  aggregate  as 
the  servants  of  the  Post  Office.  All  this  vast  number  of  persons,  not  living  like  soldiers  and  sailors 
outside  ordinary  civil  life  are  individually  and  collectively  interested  in  using  their  votes  to  increase,  in 
their  own  favor,  the  public  expenditure,  which  the  rest  of  the  community,  who  have  to  gain  their  living 
in  the  unrestricted  competition  of  the  open  market,  must  provide  by  taxation,  if  it  is  provided  at  all." 

From  "The  British  State  Telegraphs,"  by  Hugo  R.  Meyer,  1907,  pp.  234-235 : 

The  Chancellor  of  the  Exchequer,  Mr.  Austen  Chamberlain,  spoke  as  follo^vs :  "The  question  at 
issue  was  not  one  between  the  two  political  parties.  It  was  above  parties.  It  was  whether  there  was 
to  be  good  economical  government  in  the  country  at  all,  or  whether  the  Civil  Servants  in  the  employ- 
ment of  the  Crown  could  make  such  use  of  their  votes,  as  citizens,  for  the  purely  selfish  purpose  of 
forcing  the  public  to  pay  more  for  their  services  and  so  increase  the  expenditure  of  a  great  Department 
of  State.  He  did  not  know  how  long  they  could  go  on  in  the  position  they  had  now  reached,  under 
which  pressure  was  brought  to  bear  on  Honorable  Members  of  all  parties  by  their  constituents.  He 
was  certain  that  if  any  scheme  could  be  devised  *  *  *  so  that  they  might  take  this  question  alto- 
gether out  of  the  region  of  political  life — not  merely  out  of  party  life,  but  out  of  Parliamentary  life — 
it  would  be  a  great  advantage.  It  would  tend  to  preserve  the  Civil  Service  free  from  that  political  in- 
fluence and  independent  of  the  changing  fortunes  of  party  which  had  been  their  great  boast  and  security 
in  the  past." 

From  "The  British  State  Telegraphs,"  by  Hugo  R.  Meyer,  1907,  pp.  305-306: 

Of  course  not  all  cases  of  intervention  by  Members  of  Parliament  are  as  successful  as  was  the 
intervention  of  Mr.  Bradlaugh,  which  resulted  in  the  promotion  of  eleven  men  out  of  fourteen  who 
had  been  passed  over  as  "not  qualified  for  promotion,"  or,  as  was  the  intervention  of  the  Member  of 
Parliament  whose  name  was  not  revealed,  which  brought  about  the  revocation  of  the  promotion  of  the 
ablest  man  in  the  Post  Office  at  Sheffield.  Indeed,  the  principal  effect  of  these  interventions  is  not  to 
force  the  Post  Office  to  retrace  steps  already  taken,  it  is  to  prevent  the  Post  Office  from  taking  certain 
steps.  These  interventions  modify  the  entire  administration  of  the  British  Post  Office.  They  compel 
the  Postmaster  General  and  his  leading  officers  to  consider  the  political  aspect  of  every  proposal  coming 
from  the  local  postmasters,  and  other  intermediate  officers,  be  it  a  proposal  to  promote,  to  pass  over,  to 
discipline,  or  to  dismiss. 

Statement  by  the  Hon.  R.  \V.  Hanbury,  M.  P.  ("The  British  State  Telegraphs,"  by  Hugo  R. 
Meyer,  1907,  pp.  177-178) : 

Another  fact  which  Members  ought  not  to  overlook  was  the  political  pressure  which  was  far  too 
frequently  exercised  by  Civil  Servants  upon  those  who  also  represented  them.  That  was  a  great  and 
growing  danger.  It  was  chiefly  in  London  that  this  pressure  was  brought  to  bear.  *  *  *  He  would 
give  an  instance  of  the  way  in  which  these  Civil  Servants  spoke  of  the  expediency  of  political  pres- 
sure. At  one  of  the  great  meetings  which  had  beer,  held,  a  speaker  said  there  were  8,000  postmen  in 
London,  and  that  he  hoped  every  one  would  have  his  name  upon  the  register  (of  voters),  so  that  at 
election  times  they  could  exercise  their  influence  upon  candidates  and  advocate  the  cause  of  higher 
wages.  He  was  of  the  opinion  that  political  pressure  ought  not  to  be  brought  to  bear  in  that  way. 
Ordinary  workmen  could  not  exercise  the  same  power,  but  Civil  Servants  could,  and,  whether  their 
agitation  succeeded  or  not,  their  position  was  secure,  so  that  it  was  a  case  of  "Heads,  I  win;  tails,  I 
don't  lose."  *  *  *  Before  the  Royal  Commission  (of  1888),  which  had  inquired  into  the  Civil 
Service  establishments,  evidence  was  given  with  regard  to  the  way  in  which  pressure  was  brought  to 
bear  in  certain  constituencies  upon  Members,  and  he  thought  that  the  almost  unanimous  feeling  of  the 
Commission  was  that,  if  this  state  of  things  continued,  it  would  be  necessary  to  disfranchise  the  Civil 
Service. 

78 


i 


J 


From  "The  British  State  Telegraphs."  by  Hugo  R.  Meyer,  1907,  p.  305 : 

If  the  answer  given  by  the  Postmaster  General  is  unsatisfactory,  the  Member  of  Parliament 
gives  notice  that  he  will  bring  the  matter  up  again  on  the  discussion  of  the  Estimates  of  Expenditure. 
In  the  meantime  he  brings  to  bear,  behind  the  scenes,  what  pressure  he  can  command.  And  he  often 
learns  to  appreciate  the  grim  humor  of  the  reply  once  given  by  a  former  Minister  of  Railways  in  Vic- 
toria, Australia,  to  a  \'ictorian  Royal  Commission,  to  the  query  whether  political  influence  was  exer- 
cised in  the  administration  of  the  State  railways  of  \'ictoria.  The  reply  had  been :  "I  should  like  to 
know  how  you  can  have  a  politician  without  political  influence?" 

From  "The  British  State  Telegraphs,"  by  Hugo  R.  Meyer.  1907.  pp.  139-140: 
Sir  Lyon  Playfair.  who  had  been  Chairman  of  the  Royal  Commission  on  the  Civil  Service,  1874 
to  1876,  and  the  author  of  the  Playfair  Reorganization  of  the  Civil  Service,  1876,  testified  as  follows 
before  the  Royal  Commission  of  1888:  "Unfortunately  Members  of  Parliament  yield  to  pressure  a 
great  deal  too  much  in  that  direction,  and  they  are  certainly  pressing  the  Exchequer  to  increase  the 
wages  and  salaries  of  the  employees  of  the  Crown.  *  *  *  In  a  private  establishment  a  man  looks 
after  his  own  interests,  and  if  a  person  came  to  him  and  said:  'Now  you  must  increase  the  salaries  of 
these  men  by  $100  or  $250  all  round.'  he  would  say:  'You  are  an  impertinent  man,  you  have  no  busi- 
ness to  interfere,'  but  you  cannot  say  that  to  Members  of  Parliament,  and  there  is  continual  pressure 
from  Members  of  Parliament  to  augment  the  salaries  of  the  civil  servants." 

Statement  by  D.  .\.  Ross,  member  of  the  Manitoba  Legislature.  (Winnipeg,  Manitoba,  Free 
Press,  Xovember  6,  1913) : 

In  the  administration  of  all  the  public  utilities  of  the  province,  the  elevators,  the  telephones  and 
every  other  enterprise,  the  Roblin  government  have  contaminated  the  name  of  the  province  with  po- 
litical leprosy. 

(Foreipn — Editorial) 

Winnipeg,  Manitoba,  Free  Press,  June  15,  1912: 

It  is  matter  of  public  knowledge  that  the  telephone  system  has  from  the  beginning  been  run  as 
the  main  part  of  the  Government's  political  machine,  the  Commission  being  subjected  to  constant  in- 
terference and  control,  as  in  the  case  of  the  rate  reductions  on  the  eve  of  the  last  elections.  That 
particular  piece  of  Government  control  of  the  Commission  is  on  public  record,  in  the  statement  made 
by  the  chairman  of  the  Commission,  when  under  examination  before  the  Public  Accounts  committee 
of  the  Legislature. 

************ 

The  hiring  of  Manitoba  Government  Telephone  employees  has  been  on  political  lines,  the  Com- 
mission being  loaded  up  with  brigades  of  political  workers.  In  like  manner  the  hiring  of  rigs  and  the 
purchase  of  supplies  for  the  numerous  telephone  gangs  throughout  the  Province  have  been  conducted 
on  political  lines. 

(American — Official) 

From  the  report  of  W.  Q.  Gresham,  Postmaster  General  of  the  United  States,  year  1883,  p.  35: 
The  establishment  and  operation  of  a  postal  telegraph  as  a  monopoly,  or  in  competition  with 
private  companies,  would,  it  is  insisted,  reduce  rates  which  are  now  exorbitant  and  protect  the  public 
against  the  abuses  and  evils  deemed  to  be  inseparable  from  the  service  as  it  exists.  In  either  event  an 
enormous  expense  must  be  incurred.  But  without  dwelling  upon  that  consideration,  it  is  clear  that 
an  efficient  execution  of  either  plan  will  necessarily  involve  the  employment  of  a  multitude  of  opera- 
tors, messengers,  mechanics,  and  laborers,  and  thus  largely  ad<i  to  the  patronage  of  the  Government. 
An  increase  of  that  patronage  beyond  what  is  indispensable  to  the  public  service  is  to  be  deprecated  and 
avoided,  and  it  is  one  of  the  dangers  which  threaten  the  purity  and  duration  of  our  institutions.  In 
Europe  the  telegraph  is  under  the  control  of  the  public  authorities.    With  us,  the  administration  is  the 

79 


Government  in  action,  and  may,  for  the  lime  being  and  for  all  practical  purposes,  be  considered  the 
Government  itself.  In  seasons  of  political  excitement,  and,  to  some  extent  at  other  times,  is  there  not 
ground  for  serious  apprehension  that  the  telegraph,  under  the  exclusive  control  of  the  dominant  party, 
might  be  abused  to  promote  partisan  purposes  and  perpetuate  the  power  of  the  administration?  But  if 
it  could  be  kept  entirely  free  from  such  influence,  1  should  hesitate  to  sanction  a  measure  providing 
that  the  United  States  shall  become  the  proprietor  of  telegraph  lines,  and  operate  them  by  its  officers 
and  agents. 

Fitchburg,  Mass.,  Sentinel,  December  20,  1913 : 

Former  Senator  Bourne  of  Oregon  is  quoted  in  a  Washington  dispatch  to  the  following  effect: 

"Senator  Bourne  states  that  he  has  not  a  dollar's  interest  in  telephone  or  telegraph  securities 
and  that  he  is  theoretically  in  favor  of  government  ownership,  though  practically  bitterly  opposed  to  it. 

"The  ex-Senator's  most  startling  deduction  is  that  government  ownership  would  result  eventually 
in  complete  domination  of  the  government  by  its  own  employees,  who  would  vote  themselves  such 
hours  and  pay  as  they  chose.     Mr.  Bourne  submits  the  following  figures : 

Number 

1911  Government  civil  employees 410,332 

1912  Telephone  employees 221,000 

1912     Telegraph  employees 40,000 

1911     Railway  employees 1,669,000 

1909     Electric  employees  209,729 

1904     Water  transportation 188,000 

1907     Express  companies 79,284 

Total 2,818,345 

Under  government  ownership  and  operation  there  would  soon  be  more  than  three  million  gov- 
ernmental employees,"  Mr.  Bourne  says.  He  continues:  "Taking  into  consideration  the  fact  that  in 
the  last  ten  presidential  elections  the  president  has  been  elected  by  a  plurality  varying  from  7,000  plus 
to  little  over  2,500,000,  the  thought  naturally  arises  that  three  million  governmental  employees  could 
absolutely  control  the  government  under  our  political  machinery,  the  tendency  being  more  pay,  less 
service  in  governmental  employment,  resulting  in  resistless  efforts  on  the  part  of  outside  labor  to  secure 
government  employment  because  less  onerous  and  more  remunerative,  with  accumulative  dissatisfaction 
and  irritation  in  all  private  enterprises." 

Congressional  Record,  January  15,  1914,  page  1753: 

Mr.  Moon:  *  *  *  You  are  drifting  rapidly  to  the  exercise  of  central  power.  If  you  shall 
adopt  the  policy  of  the  purchase  of  the  telegraphs  and  tele]>hones,  you  will  have  proceeded  far  to  the 
federalization  of  power.  You  will  have  added  thousands  of  offices  to  your  Government.  If  you  should 
go  further  and  become  the  owners  of  the  railroads,  you  would  see  a  vast  army  of  people  who  would  be 
in  control,  a  Federal  menace  to  human  rights  and  human  liberty  under  a  Constitution  and  laws  in  which 
the  people  have  no  part  in  selecting  the  officers  to  administer. 

Washington,  D.  €.,  Post,  December  11,  1913: 

Senator  Bankhead,  of  Alabama,  chairman  of  the  Senate  committee  on  postoffices  and  post  roads, 
is  a  pronounced  opponent  of  government  ownership. 

"I  recognize  it  is  the  tendency  of  the  times,  but  it  is  a  dangerous  tendency,"  he  said.  "I  don't 
want  to  see  the  government  go  into  any  business  that  can  be  transacted  as  well  or  better  by  individual 
enterprise." 

From  The  American  Commonwealth,  (New  Edition,  1910,  Vol.  II,  Part  6,  Chapter  106,  Page 
701),  by  James  Bryce,  British  Ambassador  to  the  United  States: 

It  (i.  e.  the  railroad)  can  hardly  be  taken  over  and  worked  by  the  National  Government  as  are 
the  railways  of  Switzerland  and  many  of  those  in  Germany  and  the  Austro-Hungarian  monarchy.   Only 

80 


the  most  sanguine  state  socialist  would  propose  to  impose  so  terrible  a  strain  on  the  virtue  of  American 
politicians,  not  to  speak  of  the  effect  upon  the  constitutional  balance  between  the  States  and  the  Federal 
Authority. 

From  remarks  of  Senator  Joseph  R.  Bristow,  of  Kansas,  before  the  United  States  Senate  {Con- 
nressional  Record,  August  29,  1913,  p.  4303)  : 

I  wanted  to  suggest  to  the  Senator,  by  his  permission,  that  there  is  a  wide  difference  between  the 
running  of  a  wholesale  house  and  the  administration  of  a  government  position.  The  Senator  knows 
well  that  the  man  in  control  of  a  wholesale  house  is  interested  in  the  development  of  a  business  for 
profit.  The  man  in  charge  of  a  political  office  in  Georgia  or  Kansas  or  any  place  else  is  appointed 
there,  if  it  is  outside  of  the  civil  service,  nine  times  out  of  ten  because  of  political  service  that  he  has 
rendered  to  members  of  the  party  in  power.  The  Commissioner  of  Internal  Revenue  is  not  free  to  go 
out  and  select  the  men  who  he  thinks  will  administer  the  office  better  as  is  the  man  in  charge  of  a 
business  concern ;  he  is  bound  by  political  obligations  and  ties.  Now,  we  may  theorize  all  we  please, 
but  that  the  Senator  from  Georgia  knows  to  be  a  fact. 

From  Preliminary  Report  of  the  Joint  Commission  on  Business  Methods  of  the  Post  Office  De- 
partment and  Postal  Service,  February  10,  1908: 

The  appointments  of  postmasters,  clerks  in  postolfices,  and  many  other  grades  of  the  service  are 
still  largely  affected  by  political  influence,  and  it  is  to  be  feared  that  nominations  made  have  often  in- 
sufficient regard  to  the  fitness  of  the  applicant,  to  his  previous  experience,  or  to  his  familiarity  with  the 
routine  of  the  postal  service.  Moreover,  the  frequent  changes  in  the  personnel  of  the  service  naturally 
operate  adversely  to  its  efficiency. 

As  compared  with  this  condition,  in  well-administered  commercial  concerns  promotion  is  by 
merit  alone,  no  other  influences  being  considered  ;  and  the  different  parts  of  the  business  are  intrusted  to 
heads  thoroughly  familiar  with  the  whole  routine  work,  who  are  held  responsible  for  the  work  and  are 
given  practically  a  free  hand  in  the  selection,  promotion,  and  retention  of  their  subordinates. 

Congressional  Record,  January  20,  1914,  p.  2035 : 

Mr.  Murdock  :  *  *  *  Now,  I  do  not  take  much  stock  in  the  battle  that  has  raged  here  be- 
tween the  two  old  parties  about  civil  service.  It  is  a  resumption  of  the  ancient  and  diverting  game 
of  the  pot  and  the  kettle.  The  Rcpulilicans  say  that  the  Democrats  are  not  friendly  to  the  merit  sys- 
tem and  the  Democrats  say  that  the  Republicans  are  not  friendly  to  the  merit  system.  Both  of  them 
are  right. 

Congressional  Record.  January  19,  1914,  p.  1972: 

Mr.  McCumber:  *  *  *  Government  ownership  of  railways,  followed  by  Government  owner- 
ship, as  it  must  be,  of  other  public  utilities,  means  that  the  army  of  employees,  organized  as  they  always 
will  be,  will  become  the  complete  masters  of  the  Government  and  the  Governnn  nt  but  the  subservient 
tool  to'the  interests  of  this  great  army.  That  army  will  be  powerful  enough  to  dictate  every  policy  of 
Government.  No  man  in  any  district  in  the  United  States  would  be  strong  enough  to  make  his  race  as 
a  Member  of  Congress  if  his  ideas  of  the  value  of  the  wages  of  these  Government  employees  did  not 
correspond  with  their  idea  of  the  worth  of  their  services.  Whenever  the  Government  puts  itself  in  the 
position  of  owner  of  public  utilities,  it  becomes  the  prey  of  an  organized  class  of  people,  which  will 
result  in  legislation  against  the  mass  of  the  unorganized  people  of  the  country. 

Congressional  Record,  January  17,  1914,  p.  1958: 

Mr.  Campbell  :    Suppose  a  Republican  should  have  a  higher  grade  than  a  Democrat  for  the  same 

office,  then  what  would  you  do? 

Mr.  Cox  :  Ah,  I  have  had  to  go  up  against  that  ever  since  I  have  been  in  Congress,  I  am  sorry 
to  say,  where  Democrats  in  my  district  who  had  taken  rural-route  examinations  and  were  several  points 
the  highest  in  the  grade.    I  have  gone  down  to  the  Post  Office  Department  and  tried  to  get  them  to 

81 


appoint  the  Democrat,  but  was  told  that  some  Repubhcan  referee  in  the  State  of  Indiana,  after  both 
Republican  United  States  Senators  were  defeated,  had  to  be  consulted,  and  their  orders  had  to  be 
obeyed ;  and  the  result  was  time  and  again  that  Democrats  failed  to  get  the  position,  although  holding 
the  highest  grade. 

From  the  Congressional  Record,  January  17,  1914,  p.  1959: 

Mr.  Cox:  *  ♦  *  I  mean  to  say  this,  for  the  third  and  last  time  that  I  am  going  to  say  it, 
that  if  I  have  any  control  or  any  voice  in  the  selection  of  persons  to  fill  positions  in  my  district  where 
a  competitive  examination  has  been  held,  that  if  a  Democrat  gets  on  the  eligible  register  he  is  going  to 
get  the  appointment. 

Congressional  Record,  January  17,  1914,  p.  1921 : 

Mr.  Post  :  I  want  to  give  the  gentleman  a  concrete  illustration  to  show  that  the  merit  system, 
as  it  has  been  administered  heretofore,  has  been  indeed  prostituted  to  politics.  In  the  city  of  Spring- 
field, Ohio — and  the  gentleman  is  familiar  with  that  city — we  have  a  post  office  where  there  are  107 
employees,  and  of  that  number  only  6  are  Democrats.     I  want  to  ask  the  gentleman  if  in  the  city  of 

Springfield,  in  the  application  of  the  merit  system,  that  office  has  not  been  prostituted  to  politics? 

*     *     * 

Right  here,  under  the  very  nose  of  the  Goddess  of  Liberty,  right  in  front  of  the  Capitol  here, 
in  the  Congressional  Library,  you  have  496  employees  under  the  civil  service,  and  less  than  50  of  them 
are  Democrats.  Have  you  not  prostituted  the  merit  system  to  politics  in  that  case?  Those  people 
are  there  under  a  Republican  administration. 

Congressional  Record,  January  17,  1914,  p.  1958: 

Mr.  Cox:  *  *  *  You  have  evolved  and  manufactured  a  new  definition  of  the  merit  system 
which  has  been  a  political  merit  system.  By  a  political  pull  it  has  found  its  way  into  the  appointment 
of  civil-service  employees  so  that  you  have  filled  practically  every  department  with  Republican  em- 
ployees at  home  and  abroad,  the  exceptions  being  indeed  very  few.  You  have  paid  no  attention  to 
merit,  aljility,  intelligence,  education.  These  things  were  wholly  unknown  to  you  in  your  appointments. 
You  were  governed  solely  and  exclusively  by  the  political  rule  of  political  expediency ;  you  have  ap- 
plied this  test  faithfully;  have  never  faltered  or  fallen  by  tlie  side  along  this  line.  Out  of  1,900  rural 
route  carriers  in  the  State  of  Indiana  to-day  I  assert  it  to  be  a  true  fact,  for  I  liave  investigated  it,  tliat 
less  than  5  per  cent,  of  this  1,900  rural  route  carriers  are  Democrats;  the  remainder  were  Republicans 
when  appointed  and  Republicans  to-day,  and  were  it  not  for  encumbering  the  Record  I  would  place  in 
it  a  volume  of  correspondence  from  82  of  the  92  counties  in  my  State  conclusively  showing  this  con- 
dition to  be  true. 

Congressional  Record,  January  17,  1914,  p.  1950: 

Mr.  Steenerson  ;  *  ♦  *  The  gentleman  from  Tennessee  predicted  dire  results  to  the  Govern- 
ment antl  the  people  if  postal  activities  should  be  extended  to  telegraphs  and  telephones.  I  do  not  think 
we  are  ready  for  that.  Certainly  not  as  long  as  the  spoils  system  in  the  Civil  Service  remains  a  debated 
issue. 

From  the  Congressional  Record,  January  17,  1914,  p.  1959: 

Mr.  Cox:  *  *  *  I  have  seen  school-teachers  in  Indiana  carrying  a  two-years'  license — and 
this  requires  considerable  of  an  education  in  Indiana  before  one  can  earn  a  two-years'  license — I  have 
seen  them  stand  civil-service  examinations  for  rural-route  carriers  side  by  side  with  ward  politicians, 
men  with  practically  no  education  whatever,  and  yet  invariably  the  ward  politician  received  the  job. 

Congressional  Record,  January  17,  1914,  p.  1916: 

Mr.  Kahn:  *  *  *  I  am  not  surprised  at  the  attitude  of  the  gentlemen  on  the  Democratic 
side  of  this  House.  The  pressure  for  place  is  undoubtedly  very  great.  Your  Democratic  constituents 
are  demanding  their  reward.    They  want  the  jobs.     They  insist  on  their  pound  of  flesh.    Not  alone  are 

82 


the  civil-service  positions  sought  for,  but  various  executive  chiefs  have  demanded  the  resignation  of 
postmasters,  United  States  marshals,  district  attorneys,  and  other  Federal  emiiloyecs,  even  thougii  those 
otticials  still  had  two  or  three  years  to  serve  under  their  commissions.  Happily  some  of  these  men  have 
had  the  backbone  and  the  courage  peremptorily  to  refuse  to  surrender  their  conmiissions  and  to  demand 
that  their  official  conduct  be  investigated,  to  find  out  why  they  should  be  removed  from  office. 

Congressional  Record,  January  17,  1914,  p.  1908: 

Mk.  Rlxker:  *  *  ♦  There  are  Democrats  growing  up  in  the  country  everywhere  who  are 
entitled  under  a  Democratic  administration  to  recognition;  and  if  that  means  going  back  to  the  spoils 
system,  then  I  am  a  spoilsman  and  I  have  no  apology  to  make  for  it.     (Applause.) 

Congressional  Record.  January   17,   1914,  p.  1906: 

Mr.  Borland:  *  *  *  It  has  been  my  experience  and  observatiaon  that  not  only  was  the 
postmaster  named  by  some  political  officer  in  authority  for  political  purposes  and  named  without  any 
special  regard  to  his  experience  in  that  post-office  business,  but  that  same  authority  named  also  the 
assistant  postmaster,  and  without  consultation  with  the  postmaster.  And  not  only  that,  but  it  has 
frequently  happened,  I  will  say  to  my  friend  from  Indiana  (Mr.  Barnhart),  that  the  assistant  post- 
master was  named  from  the  faction  of  the  party  that  did  not  happen  to  land  the  postmaster.  I  have 
known  of  cases — and  I  have  no  doubt  my  friend  has,  too — where  the)  not  only  did  not  work  in  har- 
mony, but  where  they  did  not  trust  each  other  personally,  and  I  have  always  regarded  it  as  a  political 
blunder,  if  no  worse,  to  put  those  men  under  political  appointment. 

Congressional  Record,  January  17,  1914,  p.  1907: 

Mr.  Cooper:  Is  it  not  true  that  under  the  policy  or  practice  suggested  by  the  question  of  the 
gentleman  from  Missouri  (Mr.  Rucker)  assistant  postmasters  were  appointed  in  this  way:  The 
Member  of  Congress  wanted  it  understood  that  if  John  Smith  was  api)ointed  postmaster  it  was 
done  upon  the  express  condition  that  John  Brown  should  be  the  assistant  postmaster,  and  that  in 
many  cases  the  postmaster  had  to  agree  to  that  before  he  could  get  the  appointment,  and  in  that  way 
the  Congressman  fixed  up  a  part  of  his  own  ijiachine? 

Mr.  Rucker:     That  is  exactly  what  I  would  do  in  every  case,  and  I  have  no  apology  for  it. 

Mr.  Borland:  It  would  be  bad  enough  under  the  old  conditions;  but  under  the  altered  condi- 
tions, since  the  Post  Office  Department  has  become  distinctly  a  business  institution,  there  is  no  justifi- 
cation whatever  for  appointing  these  men  for  political  purposes. 

Congressional  Record,  January  17,  1914,  p.  1956: 

Mr.  Cox  ;  *  *  *  On  September  30,  1910,  President  Taft  by  an  Executive  order  turned  into 
the  civil  service  approximately  2,400  assistant  postmasters.  Of  these  2,400  assistant  postmasters  less 
than  500  of  them  had  ever  been  subjected  to  or  had  ever  stood  a  written  competitive  examination. 

The  remainder  of  them,  1,900  in  number,  had  beyond  doubt  been  appointed  to  tlieir  respective 
positions  solely  and  exclusively  because  of  their  peculiar  fitness  politically. 

Congressional  Record,  January  17,  1914,  p.  1956: 

Mr.  Cox  ;  *  ♦  ♦  We  have  had  in  this  country  a  "pretended"  civil  service  for  the  last  30 
years  or  more.  I  call  it  "pretended"  civil  service  because  that  is  all  it  is,  all  it  ever  was,  and  all  it 
ever  will  be  until  the  Civil  Service  Commission  amends  its  rules  and  regulations  in  regard  to  certifying 
eligibles  who  have  passed  a  civil-service  examination.  Talk  to  me  about  merit  system  all  you  please. 
We  do  not  have  merit  system  under  civil  service,  never  have  had,  and  never  will  have  until  the  rules 
and  regulations  of  the  commission  are  amended  so  as  to  make  it  strictly  a  merit  system.  The  trouble 
with  the  civil-service  system  as  it  is  administered  to-day,  in  my  judgment,  is  that  you  give  a  leeway 
for  any  and  all  persons  and  parties  to  play  "football"  with  it,  and  the  Republican  Party  for  16  years 
has  played  "football"  with  it  under  the  leeway. 

83 


Congressional  Record,  January  17,  1914,  p.  1907: 

Mr.  Borland:  *  *  *  1  do  not  even  l)elieve  those  men  are  appointed  in  all  cases  for  party 
service.  I  believe  they  are  often  appointed  for  service  to  some  political  officeholder  who  has  the  rec- 
ommendation of  their  appointment. 

Mr.  Rucker:     The  gentleman  ought  not  to  go  that  far. 

Mr.  Borland:     I  will  go  that  far. 

************ 

Mr.  Borland:  I  say  that  they  are  appointed  not  necessarily  for  party  services,  distinguished 
as  such,  nor  because  their  views  upon  i)arty  questions  are  sound,  and  would  appeal  to  the  mass  of 
the  voters  in  their  district  if  they  were  candidates  for  an  elective  office;  but  they  are  appointed  be- 
cause they  have  been  politically  useful  to  the  man  who  recommends  their  appointment.  Why,  they 
may  not  have  been  serving  the  party.  They  may  have  been  serving  only  a  faction.  They  may  have 
served  only  a  political  boss  or  leader.  (Applause.)  I  object  to  either  the  postmaster  or  the  assistant 
postmaster  being  made  the  official  whip  cracker  over  the  heads  of  the  men  in  the  classified  service,  in 
the  interest  of  either  party,  faction,  or  boss.     (Applause.) 

Congressional  Record,  January  17,  1914,  p.  1957: 

Mr.  Switzer  :    How  will  you  do  in  Indiana  ? 

Mr.  Cox:  Exactly  as  you  have  played  politics  and  "football"  with  the  civil-service  law  for  16 
years ;  1  propose  to  turn  the  tables  on  you  and  do  exactly  as  you  have  done ;  and,  so  far  as  your  State 
is  concerned,  I  take  it  that  if  a  Democrat  gets  on  the  eligible  register  there  will  be  enough  warm 
Democratic  blood  in  the  members  of  this  House  from  the  State  of  Ohio  to  see  to  it  that  Democrats 
are  appointed. 

Mr.  Switzer  :     Then  you  are  not  going  according  to  the  civil-service  policy  ? 

Mr.  Cox:  Yes;  we  are.  We  will  be  administering  it  exactly  as  the  civil-service  policy  was 
administered  by  you  and  your  party  ever  since  you  have  been  in  power,  and  that  is,  see  to  it  that 
every  time  a  Democrat  wins  out  in  the  written  competitive  examination,  if  he  goes  on  the  eligible 
register,  see  to  it  that  he  gets  the  position. 

» 

Congressional  Record,  January  17,  1914,  pp.  1957-8: 

Mr.  Cramton  :  And  thereby  you  have  admitted  that  your  party  is  to-day  playing  football  with 
the  civil  service? 

Mr.  Cox :  This  is  exactly  what  you  have  done  with  the  civil-service  law  for  the  last  16  years, 
and  you  know  it  to  be  true,  and  you  cannot  blame  the  Democratic  Party  for  retaliating  in  self-defense. 

Mr.   Cramton  :     Never  mind   your   reason ;  but  you  admit  you  are  doing  it. 

Mr.  Cox:  Whether  you  cnll  it  playing  football  or  not,  by  your  own  example  you  have  set 
the  pace,  and  if  we  turn  the  trick  on  you,  you  should  not  blame  us.  I  am  a  partisan  ;  of  course  I  am, 
and  frankly  state  to  you  that  if  a  Democrat  gets  on  the  eligible  register  for  fourth-class  postmaster 
he  is  going  to  get  the  appointment  if  1  can  aid  him  in  so  doing. 

Congressional  Record,  January  17,  1914,  p.  1958: 

Mr.  Cox  ;  *  *  *  I'iow,  in  response  to  queries  from  gentlemen  on  the  Republican  side,  let 
me  give  you  an  instance  as  to  how  you  have  played  football  in  the  past  with  public  offices.  I  had 
a  Kcj)uljlican  friend  two  years  ago  who  wanted  to  be  reappointed  postmaster  in  my  district,  and, 
being  a  member  of  the  Committee  on  the  Post  Office  and  Post  Roads,  I  thought  I  might  give  him 
some  little  influence  with  Postmaster-General  Hitchcock.  I  called  ujwn  the  General,  and  was  told  by 
him  that  the  little  post  office  in  a  little  town  of  about  2,500  was  on  the  auction  block  and  that  if  the 
postmaster  could  deliver  the  delegates  to  the  district  meeting  that  would  select  the  delegates  to  attend 
the  national  convention  he  could  receive  the  appointment.  I  informed  my  friend  by  letter,  and  he  car- 
ried out  my  orders  to  a  certain  point,  but  failed  to  carry  them  out  to  the  final  conclusion,  and  the 
result  was  that  he  did  not  get  that  post  office. 

84 


Mr.  Switzer:    What  was  the  highest  bid? 

Mr.  Cox:     The  bid  was  for  the  nomination  of  tr.e  Republican  President  in  1912. 

A  Member:    Who  told  you  that? 

Mr.  Cox:    Mr.  Hitchcock. 

Congressional  Record,  January  17,  1914,  p.  1959: 

Mr.  Fess:  Do  I  understand  that  it  does  not  matter  what  the  regulation,  the  gentleman  is 
opposed  to  civil  service  on  the  merit  system? 

Mr.  Cox:  No;  I  am  opposed  to  the  way  in  which  you  have  administered  it,  or  your  party 
rather. 

Mr.  Fess:     Then  why  does  the  gentleman  not  endeavor  to  administer  it  differently? 

Mr.  Cox  :     Because  partisans  will  administer  it  in  a  partisan  way. 

Congressional  Record,  January  17,  1914,  p.  1958: 

Mr.  Cox :  I  am  not  quarreling  with  the  Civil  Service  Commission.  I  imagine,  so  far  as  the 
examining  of  the  papers  are  concerned,  it  is  fair;  but  you  have  had  an  underground  tunnel,  a  sub- 
terranean passage,  whereby  in  some  way  or  manner  the  Democrats  in  my  part  of  the  country  have 
had  no  show  on  earth;  and  this  became  so  obnoxious  out  in  Indiana  several  years  ago  that  bright, 
active,  intelligent  young  men — Democrats — flatly  refused  to  go  forward  and  stand  examinations. 

Speech  of  Representative  Moon,  Chairman  of  the  Committee  on  Post  Offices  and  Post  Roads, 
published  in  the  Congressional  Record,  January   15,  1914,  pp.  1750-51 : 

Mr.  Moon:  *  *  *  There  are,  I  believe,  2,560  assistant  postmasters  in  the  United  States.  If 
they  had  been  properly  examined  and  placed  under  the  civil  service,  would  98  per  cent,  of  them  have 
been  Republicans?  No;  it  could  not  have  been  so.  And  yet  that  is  the  practical  fact.  If  those 
43,000  men  in  the  fourth-class  offices  had  been  examined,  would  95  per  cent,  of  them  have  been  Repub- 
licans?   Gentlemen,  you  know  how  easily  it  is  done.    You  know  the  manner  of  examination. 

I  refer  to  these  matters  to  show  you  that  the  examinations  are  never  just  what  they  ought  to 
be.  They  may  not  always  be  fraudulent,  but  they  are  not  examinations  for  the  purijose  of  attaining  an 
efficiency  record.  They  are  examinations  controlled  by  favoritism  and  prejudices.  What  is  the  result 
of  the  examination?  How  is  it  that  all  of  these  Republicans  get  into  office  and  no  Democrats?  The 
examination  is  certified  to  the  department;  the  three  men,  in  the  opinion  of  the  examiners,  that  made 
the  best  grade  are  placed  upon  the  eligible  list.  There  may  have  been  one  Republican  and  two 
Democrats  who  passed,  or  it  may  have  been  the  opposite;  but  the  Congressman,  if  a  Republican  from 
that  district,  is  called  upon  to  say  which  one  of  the  three  shall  have  the  office,  and,  of  course,  gives  it 
to  a  member  of  his  party.  I  do  not,  from  a  partisan  standpoint,  blame  him.  But  if  the  examination  is 
held  for  the  purpose  of  efficiency  in  the  public  service,  there  would  be  no  question  about  the  fact  that, 
if  it  had  been  honest  and  fair,  the  man  who  obtained  the  highest  grade  would  obtain  the  office. 

Congressional  Record,  January  15,  1914,  p.  1758: 

Mr.  Copley:  *  *  *  In  the  spring  of  1909  the  Legislature  of  the  State  of  Illinois  was  trying 
to  elect  a  United  States  Senator,  and  at  one  time  I  counted  in  Springfield,  the  capital  of  that  State, 
the  city  where  the  Legislature  met,  168  Federal  employees,  all  there  for  the  purpose  of  trying  to  bring 
about  the  re-election  of  a  man  to  whom  they  were  under  obligation  for  the  generous  salaries  which 
they  enjoyed  and  whose  term  expired  forever  March  4,  1909. 

Many  of  these  employees  spent  months  in  a  vain  effort  to  continue  that  policy,  which  had  proven 
so  obnoxious  to  the  people  of  the  State  of  Illinois. 

From  the  18th  Annual  Report  of  the  Cook  County,  Illinois,  Civil  Service  Commission,  1913: 
During  the  preparation  of  the  current  budget   the  Finance  Committee,  at  the  urgent  request  of 
the  heads  of  departments,  increased  the  salaries  of  several  of  the  "old  and  faithful  employees,"  whose 

85 


services  were  described  as  "indispensable  to  the  office."  In  February,  1913,  when  the  Supreme  Court 
declared  the  Civil  Service  Act,  covering  these  positions,  to  be  invalid,  the  department  heads  were  pow- 
erless to  save  these  '"indispensable  employees"  who  were  swept  away  and  their  places  taken  by  persons 
named  from  "outside"  by  the  ward  leaders.  In  one  instance,  an  excellent  teamster  was  named  and 
forcibly  appointed  a  stenographer.  In  another  instance,  a  saloonkeeper,  of  undoubted  parts  in  the 
liquor  business,  was  made  a  clerk  and  his  duties  subsecjuently  abolibhed  to  save  the  office  books  from 
ruin.  In  another  case,  a  fiat  building  janitor  became  a  tax  clerk.  At  least  thirty  of  the  politically 
appointed  county  employees  are  pluralists  on  the  pay  rolls  of  the  state,  city  or  park  district's.  Nine  of 
them  are  members  of  the  State  Legislature. 

Congressional  Record,  October  10,  1913,  p.  6235: 

Mr.  Clark:  *  *  *  i  am  opposed  to  the  whole  civil-service  propagarnla.  (Applause.)  I 
am  opposed  to  it  because  I  believe  it  is  hypocritical,  insincere,  and  fraudulent  in  its  every  aspect,  and, 
as  my  friend  at  my  right  suggests,  damnable.  Mr.  Speaker,  I  am  opposed  to  it  because  I  believe  with 
Andrew  Jackson  that  to  the  victor  belongs  the  spoils. 

Extract  from  one  of  the  speeches  of  Theodore  Roosevelt  (published  in  the  biography  of  the  latter 
by  Jacob  A.  Riis) : 

We  hear  much  of  the  question  whether  the  government  should  take  control  of  the  telegraph  lines 
and  railways  of  the  country.  Before  that  question  can  be  so  much  as  discussed,  it  ought  to  be  definitely 
settled  that  if  the  government  takes  control  of  either  telegraph  line  or  railway  it  must  do  it  purely  to 
manage  it  as  a  business  undertaking  and  must  manage  it  as  a  service  wholly  unconnected  with  politics. 
I  should  like  to  call  the  special  attention  of  bodies  interested  in  increasing  the  sphere  of  state  action — 
interested  in  giving  the  state  control  more  and  more  over  railways,  over  telegraph  lines  and  over  other 
things  of  the  sort — to  the  fact  that  the  condition  precedent  upon  success,  is  to  establish  an  absolutely 
non-partisan  system.  When  that  point  is  once  settled,  we  can  discuss  the  advisability  of  doing  what 
these  gentlemen  wish,  but  not  before. 

Report  on  Lewis  Publishing  Co.  and  Various  Lewis  Enterprises,  by  the  House  Committee  on 
Expenditures  in  the  Post  Office  Department  (House  Report  No.  1601),  March  1,  1913: 

For  nearly  seven  years  the  Government  of  the  United  States,  through  the  Post  Office  Depart- 
ment and  the  Department  of  Justice,  has  been  almost  continuously  prosecuting  Mr.  E.  G.  Lewis  or  the 
various  enterprises  with  which  he  has  been  connected.  *  *  *  Every  effort  that  the  organized  power 
of  two  great  departments  could  exert  has  been  used  at  enormous  expense.  As  a  result  several  large 
business  concerns  managed  by  Mr.  Lewis  have  been  ruined,  among  them  the  People's  United  States 
Bank,  the  Lewis  Publishing  Co.,  and  the  University  Heights  Realty  and  Development  Co.;  many  hun- 
dreds of  small  investors  have  lost  their  savings ;  and  the  sad  example  has  been  shown  the  world  of  the 
])owers  of  a  great  Government  exerted  successfully  in  an  effort  to  ruin  a  single  individual,  and  yet  he 
has  not  been  convicted  of  any  violation  of  law. 

*         «         * 

William  A.  Ashbrook, 
Joshua  W.  Alexander, 
William  C.  Redfield, 
Walter  I.  McCov. 

(American — Editorial) 

Utica,  N.  Y.,  Press.  Dcccmhor  22,  1913: 

Government  ownership  of  the  telephone  and  telegraph  lines  has  not  worked  out  successfully 
where  it  has  been  tried.  Here  in  ihis  country  it  would  increase  tlie  army  of  federal  office  holders, 
helping  those  who  are  in  to  stay  in  and  then  when  a  change  came  there  would  be  a  general  ousting 
of  trained  and  competent  employees  to  make  way  for  untried  and  incompetent  people  who  had  a  polit- 
ical pull;  and  llurc  is  loo  much  of  that  already  wilhout  going  into  it  more  extensively. 

86 


I 


IMiiladflphia,  Ta..  Press,  December  22.  VJli: 

Patronage  in  Government  appointments  is  inconsistent  with  efficiency  and  has  been  in  the  past 
one  of  the  greatest  of  pubhc  evils.  Civil  service  reform  seeks  to  get  rid  of  this  evil  and  under  our 
latest  Administrations  very  largely  succeeded.  That  reform  is  now  discrediteil  and  the  spoils  system 
is  again  in  partial  operation.  While  this  lasts  certainly  it  will  be  no  time  to  add  another  great  army 
of  employees  to  the  public  service.  If  the  Governnunl  shall  ever  assume  the  new  responsibilities  it 
should  be  only  when  merit,  skill  and  experience  arc  secure  in  service  independent  of  the  outcome  of 
popular  election. 

Burlington,  \'t.,  Free-Press,  December  20,  1913: 

Would  it  be  good  for  the  country  or  for  the  employees  themselves  to  be  thrown  into  politics? 
Would  it  make  the  likelihood  of  a  fair  voice  in  elections  greater  to  have  this  vast  addition  to  the  mul- 
titudes of  federal  office  holders?  Would  it  make  the  task  of  governing  easier  to  have  all  the  necessary 
additional  work  laid  upon  the  National  Government?  The  wheels  of  Government  creak  a  little  already 
with  the  burden  we  put  upon  them.  If  we  make  the  ( iovernment  try  to  act  so  entirely  beyond  its  sphere, 
where  are  we  to  end  ?    Will  it  not  be  demoralizing  as  well  as  expensive  ? 

Torrington,  Ct.,  Register,  December  20,  1913: 

It  may  also  be  said  that  the  control  of  the  wires  by  the  Government  would  be  a  precursor  of 
conditions  such  as  exist  in  France  where  the  labor  organizations  have  the  telegraph  and  telephone  em- 
ployees of  the  Government  in  their  fellowship  and  thus  have  the  Government  in  important  respects 
under  their  thumb. 

Ft.  Wayne,  Ind.,  Nczvs,  December  19,  1913: 

Let  all  public  utilities  be  Government  owned,  and  we  find  the  country  in  control  of  an  office 
holding  class,  a  class  tlvit  is  able  to  operate  the  Government  in  its  own  interests  and  which  does  not 
hesitate  to  do  so.  Nothing  is  as  thoroughly  conduci\c  to  National  decay  as  a  Government  dominated 
and  controlled  by  an  office-holding  class.  Of  necessity  this  class  becomes  parasitical  as  it  increases  its 
power  and  at  the  same  time  its  efficiency  declines.  Its  sole  object  appears  to  be  to  obtain  the  maximum 
compensation  for  a  minimum  service,  and  to  saddle  itself  upon  the  country  like  the  old  man  of  the  sea. 

.Asbury  Park,  N.  J.,  Times,  December  19,  1913: 

I  f  the  merit  system  were  employed  in  the  Government  service  in  practice  as  it  is  in  principle, 
it  might  be  proper  to  supply  an  efficient  army  of  employees  to  man  this  gigantic  enterprise,  but  this  is 
impossible.  Conditions  in  the  postal  system  are  more  nearly  perfect  than  in  any  other  under  Govern- 
ment regulation,  but  even  here  the  most  desirable  offices  are  filled  by  politicians. 

Philadelphia,  Pa.,  Inquirer,  December  19,  1913: 

Most  of  the  telegraph  offices  of  the  country,  though  not  the  larger  ones,  are  in  charge  of  railway 
operators.  If  these  were  sworn  into  the  Government  service  it  would  not  be  satisfactory  to  the  rail- 
ways, for  the  employees  would  naturally  obey  regulations  of  the  Washington  administration.  There 
would  arise  a  body  of  Federal  officials  enormous  in  its  extent  and  larger  in  number  than  all  in  the 
service  to-day.  What  these  might  effect  as  a  political  organization  could  not  be  predetermined,  but  we 
may  be  pretty  sure  that  it  would  be  an  important  factor. 

New  York  Tclegra(<h,  December  13,  1913: 

Another  danger  lies  in  the  fact  that  a  mighty  army  of  civil  service  employees  would  be  added 
to  the  Federal  pavroll.  They  would  clamor  for  a  higher  wage — and  get  it.  And  if  the  time  ever  .should 
come  when  a  majority  of  the  voters  of  this  country  are  beneficiaries  of  the  public  treasury,  directly  or 
indirectly,  then  the  party  in  power  will  be  self-perpetuating. 

We  have  a  fair  example  of  what  an  ad<lition  to  the  civil  service  list  means  in  the  compact, 
unionized  bofly  of  rural  free  delivery  carriers.  When  the  rural  free  delivery  was  first  proposed  in 
Congress  by  Tom  Watson,  he  made  the  point  that  such   mails  would   be  delivered,   in   the   main,   by 

87 


farmer  boys  who  would  be  willing  to  earn  a  little  extra  money,  say,  $20.00  to  $25.00  a  month,  be- 
tween spells  at  the  plow. 

There  is  not  to-day,  possibly,  a  rural  free  delivery  carrier  in  the  United  States  who  would  lower 
his  dignity  by  standing  for  half  an  hour  between  the  plow  handles.  He  is  a  political  leader  in  his  com- 
munity— a  man  of  substance ;  and  it  may  be  remarked  in  passing  that,  almost  to  a  man,  the  carriers 
opposed  the  institution  of  a  parcel  post,  and,  on  the  ground  that  it  increases  their  work,  they  are  now 
demanding  more  pay. 

Telegraph  operators  and  telephone  operators  are  not  structurally  different  from  other  folk. 
They  would  soon  be  demanding  not  what  their  services  were  worth,  but  what  the  dominant  political 
party  was  willing  to  award  in  anticipation  of  political  favors  to  come. 

Chillicothe,  Ohio,  Gazette,  December  12,  1913 : 

Chicago  has  had  an  alleged  civil  service  system  for  years.  Here  is  how  the  "Public  Service"  tells 
us  it  works : 

Forty  thousand  persons  are  on  the  public  payroll  in  Cook  County,  in  Chicago.  It  is  estimated 
that  one  out  of  every  20  male  adults  is  a  city  or  county  employee.  Many  are  not  under  civil  service 
regulation.  The  Cook  County  Civil  Service  Commission  in  September  made  a  report  declaring  that  the 
total  amount  of  salaries  paid  county  employees  not  under  civil  service  could  be  reduced  50  per  cent., 
or  $1,072,000,  provided  ordinary  efficiency  supervision  was  used.  The  report  described  many  instances 
of  misfit  political  appointees. 

From  the  address  of  Seth  Low,  President  of  the  National  Civic  Federation,  delivered  at  its 
Fourteenth  Annual  Meeting  in  New  York  City,  on  December  11,  1913: 

*  *  *  try  to  imagine,  if  you  can,  how  the  conflicting  interests  of  different  parts  of  the 
United  States  could  be  harmonized  when  the  same  government  is  responsible  for  railroad  operation 
everywhere.  The  annual  bill  for  the  construction  of  public  buildings  for  the  Federal  government  has 
acquired  the  popular  name  of  "pork-barrel" ;  because  it  is  so  universally  recognized  that  appropria- 
tions for  this  purpose  are  made  to  gratify  local  sentiment  and  to  promote  the  interests  of  individual 
Congressmen  more  than  upon  the  merits  of  the  matter,  as  determined  by  careful  inquiry.  What  pos- 
sibility is  there  that  the  administration  of  a  system  of  National  railroads  would  be,  or  could 
be,  carried  on  under  our  democratic  government  in  any  other  spirit?  And  in  what  possible  way  could 
the  general  interests  of  the  people  of  the  United  States,  in  the  matter  of  transportation,  be  less  well 
served?  Furthermore,  the  political  consequences  of  centering  such  power  in  Washington  are  beyond 
calculation. 

Scranton,  Pa.,  Scrantonian,  November  9,  1913: 

In  spite  of  civil  service  rules  and  other  supposed  safeguards,  it  is  a  fact  that  nearly  every  place 
holder  is  with  the  governing  powers  that  be  and  the  acquirement  of  public  utilities  on  a  National  scale 
would  prove  a  treniciidous  lever  for  political  control  by  the  party  in  power,  if  it  cared  to  use  it. 

Saturday  Evening  Post,  November  9,  1912: 

In  spite  of  civil  service  reform,  the  spoils  system  is  pretty  largely  in  control  of  the  Federal 
Government,  and  virtually  in  complete  control  of  many  state  governments.  Naturally,  heads  of  depart- 
ments, who  are  the  president's  political  advisers,  change  with  a  new  administration ;  but  many  subordi- 
nates in  the  most  responsible  positions,  who  ought  to  stand  or  fall  solely  by  the  value  of  their  work, 
are  turned  out  for  political  reasons.  Civil  service  rules  protect  the  clerk  in  his  humble  job,  but  not  in 
his  ambition  to  reach  the  more  responsible  position,  that  is  still  the  spoil  of  politics.  Marshals,  revenue 
officers  and  postmasters  by  the  thousand  are  appointed  because  of  their  politics,  or  fail  of  reappointment 
on  the  same  ground.  The  public  is  taught  to  regard  Government  office  as  a  "plum,"  to  be  won  by 
political  service.  The  same  rule  obtains  in  state  and  city.  Deputy  treasurers,  assistant  auditors,  game- 
wardens  and  oil  inspectors  get  and  hold  their  jobs  through  politics.  Citizen  Jones,  of  Oskamoosa,  is 
congratulated  and  envied  by  his  fellow  townsmen  upon  having  landed  the  fish  inspectorship — because  it 
pays  more  than  he  could  earn  in  any  other  way  by  the  same  effort. 


Saturday  Evening  Post.  Xoveniber  1.  1913: 

The  Government  can  operate  telephones  ami  telegraphs— and  railroads,  for  that  matter— on 
business  principles.  It  cannot  operate  them  on  spoils  principles,  except  at  a  cost  that  would  make  the 
experiment  a  National  calamity.  The  busy  little  gratters  in  both  Houses  of  Congress,  who  distribute 
public  offices  as  rewards  for  political  service,  fairly  foreclose  the  Federal  (lovernincnt  from  some 
fields  that  it  might  enter  successfully  but  for  them.  So  long  as  the  public  service  is  burdened  with  this 
patronage  graft,  an  extension  of  that  service  to  new  fields  may  well  be  viewed  with  alarm. 

Fall  River,  Mass.,  Herald,  February  IJ,  1913: 

"I  hope  to  receive  by  return  mail  your  remittance  of  $39.  I'lease  do  not  compel  me  to  make 
another  call."  These  words  did  not  appear  in  a  little  note  attached  to  an  overdue  tailor's  bill  nor  are 
they  in  any  way  connected  with  a  coal  man's  account ;  they  are  contained  in  a  letter  written  to  the 
postmaster  at  Beebe,  Ark.,  by  (iordon  H.  Campbell,  treasurer  of  the  Republican  State  committee  dur- 
ing the  presidential  campaign  of  1912,  according  to  testimony  brought  out  at  the  hearing  in  Washing- 
ton. Mr.  Camp  did  not  accept  the  letter  seriously.  .As  a  result  he  is  no  longer  postmaster.  He  was 
compelled  to  resign  under  protest  a  few  weeks  ago  because  of  suddenly  discovered  inefficiency,  dere- 
liction of  duty  and  divers  and  sundry  other  things  of  which  he  has  no  knowledge.  But  if  the  plain 
truth  were  known  it  is  more  than  probable  that  Mr.  Camp  was  kicked  out  of  office  because  he  refused 
to  contribute  three  per  cent,  of  his  annual  salary  to  the  political  machine  in  his  State. 

Utica,  \.  Y.,  Press,  July  25,  1912: 

One  of  the  most  fruitful  causes  and  occasions  for  complaint  in  political  campaigns  is  that  the 
politicians  control  all  the  office  holders,  their  clerks  and  subordinates  with  great  efTort  at  caucuses 
and  election  time.  The  postmasters,  for  example,  are  selected  by  their  prospective  Congressman  with 
a  view  to  their  political  activity  and  ability,  and  they  are  expected  to  be  exceedingly  useful  every  two 
years  when  the  member  seeks  renomination  and  re-election.  That  is  true  of  every  person  on  the  public 
payroll,  state,  county  and  city.  They  make  an  organized  army  which  is  frequently  very  efticient. 
Suppose  that  all  the  employees  of  the  express,  telephone,  telegraph  and  railroad  companies  were  also 
on  the  public  payroll,  owing  their  positions  in  greater  or  less  degree  to  the  political  favoritism  of  those 
in  control  of  the  government?  That  would  multiply  the  army  very  materially,  and  the  bread  and 
butter  question  is  an  extremely  strong  argimient.  It  would  be  practically  impossible  to  oust  from 
power  the  party  which  had  this  multitude  of  workers  at  its  command.  Whoever  happened  to  be  Presi- 
dent of  the  United  States  under  such  a  system  could  hold  office  indefinitely  if  he  wished  to,  and  per- 
haps somebody  would. 

Washington,  D.  C,  Post,  June  17,  1912: 

Even  drastic  civil  service  rules  cannot  nullify  the  unwritten  law  that  "to  the  victor  belongs  the 
spoils."  So  long  as  there  are  politicians,  politics  will  play  its  part  in  the  government  service,  and  if 
that  service  is  extended  to  public  utilities,  the  administrations  of  the  latter  will  be  marred  by  political 
influence  and  favoritism. 

Saturday  Evening  Post,  May  18,  1912: 

Somewhere  round  the  post  office  you  will  find  a  formidable  placard  headed  in  blood-red  type — 
Warning  Against  Activity  in  Politics  by  Federal  Officers  and  Employees.  The  postmaster  who  hung 
it  up  was  appointed  on  the  recommendation  of  a  senator  or  representative  exactly  because  he  had  been 
active  in  politics.  He  knows  very  well  that  if  his  party,  or  his  faction  of  his  party,  is  defeated  he  will 
be  turned  out  when  his  term  expires,  or  before.  He  knows  the  post  office  offers  him  no  permanent 
employment  and  that,  whatever  his  record  may  be,  he  has  not  the  slightest  chance  of  advancement. 
The  better  positions  and  larger  salaries  will  not  go  to  those  who  have  performed  valuable  service  in  the 
department,  but  to  those  who  have  performed  valuable  service  in  politics.  So  it  is  in  other  depart- 
ments. 

89 


Extract  from  an  article  entitled  "The  Government  and  the  Railroads,"  by  Arthur  T.  Hadley, 
LL.D.,  President  of  Yale  University,  published  in  Youth's  Companion,  April  18,  1912: 

Congress  at  each  session  invests  a  large  amount  of  public  money  for  the  improvement  of  trans- 
portation facilities  through  the  agency  of  a  river  and  harbor  bill.  Is  this  money  wisely  invested,  with  a 
far-sighted  view  toward  the  public  interest?  No.  Each  member  of  Congress  is  more  concerned  with 
the  immediate  demands  of  his  district  than  with  th  general  needs  of  the  country.  Thousands  of  dol- 
lars are  wasted  in  dredging  streams  that  cannot  ever  be  of  any  considerable  use,  while  large  and  much- 
needed  improvements  are  either  postponed  or  carried  on  in  a  half-hearted  and  inefficient  manner. 

Editorial  by  Theodore  Roosevelt,  in  The  Outlook,  April  6,  1912: 

I  have  before  me  as  I  write  the  original  of  a  letter  sent  to  Mr.  Figley,  the  postmaster  at  Hast- 
ings, Oklahoma,  by  Mr.  James  Harris,  the  Chairma     of  the   Republican   State   Committee.     The   en- 
velope is  marked  "personal,"  together  with  a  memorandum  to  return  it  after  five  days  to  the  Harris 
Brothers.    The  letter  itself  runs  as  follows: 
Dear  Sir: 

I  am  in  receipt  of  the  following  letter  from  the  Department: 

"The  commission  of  Newton  S.  Figley,  Postmaster  at  Hastings,  Oklahoma,  will  expire  Feb- 
ruary 28,  1912.  When  last  inspected,  this  office  did  not  appear  to  be  in  a  satisfactory  condition,  and 
unless  the  postmaster  can  be  relied  upon  to  raise  the  service  to  a  higher  standard  of  efficiency  it  is  be- 
lieved that  he  should  not  be  reappointed.  The  department  will  be  pleased  to  receive  as  promptly  as 
possible  an  expression  of  your  views  as  to  what  action  in  this  case  will  be  for  the  best  interests  of  the 
service. 

"I  hope  you  have  your  office  in  first-class  condition  and  will  continue  to  have  it  so. 

"If  you  will  bring  in  a  delegation  to  the  State  and  District  Conventions  instructed  for  Taft  and 
Jim  Harris,  I  will  see  that  you  are  reappointed. 

"With  best  wishes,  I  am, 

Very  truly, 
(Signed)    J.  A.  Harris,  Chairman." 

Mr.  J.  E.  Dyche,  of  Oklahoma  City,  Oklahoma,  who  forwarded  the  letter  to  me,  writes  in  an 
entirely  friendly  spirit  about  Mr.  Harris,  and  say  that  Mr.  Harris  has  admitted  to  him  that  the  letter 
is  genuine,  and  that,  moreover,  he  knows  Mr.  Harris's  signature. 

Statement  by  James  Dalrymple,  Manager  of  the  Glasgow  Municipal  Tramways,  as  published 
in  the  Boston,  Mass.,  Transcript,  January  31,  1906: 

To  put  street  railroads,  gas  works,  telephone  companies,  etc.,  under  municipal  ownership  would 
be  to  create  a  political  machine  in  every  large  city  that  would  be  simply  impregnable.  The  political 
machines  are  already  strong  enough  with  their  control  of  policemen,  firemen  and  other  office  holders. 

If,  in  addition  to  this,  they  could  control  th  thousands  of  men  employed  in  the  great  public 
utility  corporations,  the  political  machines  would  have  a  power  that  could  not  be  overthrown. 

I  came  to  this  country  a  believer  in  public  ovnership.  What  I  have  seen  here,  and  I  have 
studied  the  situation  carefully,  makes  me  realize  that  private  ownership  under  proper  conditions  is  far 
best  for  the  citizen  of  American  cities. 

New  York  World,  December  26,  1913: 

National  ownership  of  telegraph  and  telephones  would  mean  a  governmental  monopoly  of  com- 
munication. It  is  not  enough  to  assume  that  in  most  cases  and  under  most  administrations  the  privacy 
of  this  business  would  be  respected.  We  must  take  into  account  conditions  that  all  experience  shows 
may  easily  arise  under  exceptional  men  and  extraordinary  temptation. 

Less  than  six  years  ago  it  was  found  that  Roosevelt  was  spending  more  than  $7,000,000  a  year 
on  three  thousand  secret  service  agents,  the  whole  s  -stem  being  in  violation  of  the  spirit  of  the  law,  and 
part  of  it  in  violation  of  the  letter  of  the  law.  When  Congress  undertook  to  assert  its  constitutional 
powers  over  government  expenditures,  Mr.  Roosevelt  had  the  effrontery  to  declare  in  a  message  that 

90 


this  action  was  taken  because  Congressmen  themselves  were  afraid  of  being  investigated  by  its  s])ies. 
We  have  had  in  this  country  a  benevolent  McKinley  with  Mark  Hanna  behind  him.  We  have  had  an 
easy-going  Grant  with  Zach  Chandler  at  his  elbow.  Who  will  say  such  characters  and  combinations 
will  not  appear  again  ? 

National  monopoly  of  communication  would  be  more  than  an  instrument  of  oppression,  it  would 
be  a  mighty  promoter  of  oppression.  There  would  be  an  es])ionage  in  every  suspected  post  olVice, 
spies  at  every  suspected  telegraph  station  and  eaves-droppers  at  every  susijccted  telephone  booth.  .Ml 
these  instruments  of  communication  would  be  in  the  power  of  politicians  and  political  organizations. 

Baltimore,  Md.,  Star,  December  18,  1913: 

"Control  over  all  means  of  communication  of  intelligence"  would  mean  that  every  telephone 
and  telegraph  operator  would  be  a  Goverinnent  cm])loyee  and  a  potential  Ciovernment  spy.  That  ad- 
ministration which  desired  to  muzzle  the  press  might,  under  cover  of  a  caiefully  prepared  set  of  rules, 
beyond  the  immediate  reach  even  of  Congress,  debar  from  the  telegraph  system  press  messages  which 
proved  displeasing  to  the  powers  that  were  on  the  simple  plea  that  it  was  thus  preventing  the  dissemina- 
tion of  "false"  information. 

Baltimore,  Md.,  American,  December  16,  1913: 

It  is  seen  at  a  glance  that  with  the  government  in  control  of  the  telegraph,  with  the  system  of 
party  government  in  force,  the  situation  would  be  that  of  the  telegraph  lines  under  control  of  a  party. 
In  his  speech  to  the  suffragists  Mr.  Wilson  laid  down  the  principle  that  he  as  head  of  the  nation  is 
also  the  head  of  his  party  and  governed  by  it.  So  that  the  President  of  the  United  States  and  his 
fellows  of  the  administration,  as  good  partisans,  would  be  called  upon  to  use  or  pervert  the  power  of 
the  telegraph  for  their  own  purposes.  Hence  they  would  suppress  classes  of  newspaper  dispatches 
upon  the  ground  that  they  wereglibelous  or  otherwise  subject  to  suppression.  With  a  coin])liant  attor- 
ney-general to  refer  the  matter  to,  the  way  would  be  open  for  legal  sanction.  Thus  there  might  be 
established  the  worst  form  of  indirect  censorship  of  the  press  through  partisan  control  of  the  tclegrajjli 
— not  only  might  be,  but  would  be.  There  are  too  many  politicians  as  it  is  who  fume  and  fret  under 
the  lash  of  publicity,  and  control  of  the  chief  medium  of  publicity  would  enable  them  to  reduce  the 
United  States  under  forms  of  law,  not  ostensibly  violating  liberty,  to  a  condition  little  bettor  than  that 
of  Russia. 

Washington,  D.  C,  Post,  February  14,  1913: 

Another  strong  objection  to  government  monopoly  is  that  it  breeds  bureaucracy,  the  worst  of 
paternalism's  sins.  The  old  world  governmentally  is  in  the  clutch  of  that  ofF-shoot  of  monarchism, 
and  evidences  are  not  lacking  that  democracy  as  practiced  in  America  to-day  is  taking  a  strong  slant  in 
the  same  direction.  Bureaucracy  as  we  see  it  at  work  brushes  Federal  and  State  laws  aside,  sets  up  its 
own  standards  of  administration,  and  tramples  private  rights  ruthlessly.  ".Anything  that  is  right  is 
legal"  is  bureaucracy's  motto,  and  its  bill  of  rights  is  something  to  behold. 

IVorld's  Work.  December,  1906 — article  by  T.  B.  Womack,  formerly  Judge  of  the  Supreme 
Court  of  North  Carolina: 

It  was  a  part  of  Governor  Morehead's  dream  that  North  Carolina  should  have  a  great  through 
system  of  railroads  from  mountains  to  seashore.  To  carry  out  this  idea,  a  charter  was  obtained  for 
a  road  from  Goldsboro,  the  eastern  terminus  of  the  North  Carolina  Railroad,  to  the  coast  at  More- 
head  City,  a  place  named  in  honor  of  the  Governor  and  then  considered  a  great  city  of  the  future. 
The  state  took  12,000  of  the  18,000  shares  of  stock,  appointed  a  majority  of  the  directors,  and  has 
had  absolute  control. 

This  road  has  now  been  operated  by  the  state  of  North  Carolina  for  nearly  half  a  century,  in 
war  and  peace,  by  Democrats,  by  Republicans,  and  by  Fusionists— each  with  varying  degrees  of  fail- 
ure. The  private  stockholders  for  years  have  pleaded  for  a  lease,  or  for  anything  to  avoid  a  con- 
tinuance of  political  mismanagement.     During  these  many  years  no  dividend  has  been  earned,  though 

91 


one  or  two  presidents  declared  dividends  of  one  or  two  per  cent,  per  annum  for  political  effect,  when 
every  cent  should  have  been  used  in  betterments.  The  stock  value  ranged  from  ten  to  twenty-five 
cents. 

Finally,  under  the  administration  of  Governor  Aycock,  it  became  known  that  the  administra- 
tion had  determined  to  heed  the  cries  of  the  private  stockholders  and  the  sound  business  judgment  of 
the  people  of  the  state,  and  lease  this  last  of  the  State's  railroads.  A  great  sigh  of  relief  went  up  from 
mountains  to  sea.    *    *    * 

The  efTects  of  the  lease  were  immediate.  The  first  year  of  private  management  improved  the 
road-bed  and  equipment  to  a  point  never  before  approached.  The  road  is  being  extended  and  new 
connections  made,  and  is  run  upon  business,  as  opposed  to  political,  methods. 

From  "Philosophy  and  Political  Economy"  (1893,  Book  5,  Chapter  2,  page  372),  by  James 
Bonar : 

There  seems  to  be  nothing  in  the  theory  of  development  to  point  us  clearly  to  any  centraliza- 
tion of  all  industrial  organization  in  the  State.  It  has  yet  to  be  shown  in  practice  that  beyond  a  cer- 
tain limit,  centralization  would  not  be  fatal  to  the  spontaneous  organization  which  has  as  yet  been  the 
main  source  of  all  industrial  progress. 

From  "Railroad  Transportation"  (1885,  page  49),  by  Arthur  T.  Hadley,  LL.D..  President  of 
Yale  University : 

Once  let  the  idea  go  forth  that  it  is  the  duty  of  the  state  to  take  care  of  everj-body,  and  every- 
body will  cease  to  take  care  of  himself. 


REGULATION  VS.  OWNERSHIP 

(Official) 

From  decision  of  the  Supreme  Court  of  the  State  of  Washington  (120  Pac.  Rep.  861,  at  869)  : 
In  its  search  for  remedies  and  while  seriously  considering  municipal,  state,  or  government 
ownership,  the  public,  by  reference  to  the  police  power  of  the  state,  has  almost  unwittingly  *  *  * 
solved  the  problem,  and  has  by  the  application  of  fundamental  as  well  as  established  relative  proposi- 
tions of  law  gained  every  advantage  of  ownership  without  assuming  its  burdens.  *  *  *  With 
the  power  to  fix  rates  established,  the  process  of  elimination  of  unjust  rates  became  a  mere  matter  of 
detail  based  upon  mathematical  calculation ;  the  only  question  giving  any  ground  for  debate  being  the 
basis  of  calculation. 

*  *  *  While  rivalry  may  be  promoted,  monopoly  in  the  sense  of  oppression  is  made  impossible. 
The  benefit  of  ownership  is  enjoyed,  while  its  dangers— not  the  least  of  which  is  the  (jolitical  activ- 
ities of  great  armies  of  pul)lic  employees — are  no  longer  a  menace  to  those  who,  to  avoid  the  hazards 
of  public  ownership,  have  unwittingly  subscribed  to  the  conditions  prevailing  before  this  and  other 
states  entered  upon  the  policy  of  public  control. 

Extract  from  the  Second  Inaugural  Message  of  Governor  Adolph  O.  Eberhart  to  the  Legis- 
lature of  Minnesota,  1913: 

In  my  opinion,  public  utilities  must  be  cither  owned  or  controlled  by  the  people.  Where  the 
control  can  be  vested  in  a  fair,  impartial  and  competent  authority,  removed  as  far  as  possible  from 
political  influence,  it  is  far  superior  to  ownership.  It  has  been  found  by  experience  that  it  is  very 
difficult  to  keep  municipally  owned  plants  out  of  politics.  As  a  general  principle  it  is  true  that  the 
state  or  the  city  should  not  go  into  any  business  which  can  be  transacted  as  well  by  individuals. 

From  speech  by  Judge  Lorin  Cray,  of  Mankato,  Minn.,  published  in  Public  Service,  Chicago, 
111.,  November,  1913,  page  176: 

After  all,  it  occurs  to  the  writer  that  while  we  yet  remain  ordinary  human  beings,  uncontrolled 
by  divine  impulses,  that  the  safest  way  to  deal  with  public  utilities  is  to  foster  private  ownership  and 

92 


adopt  a  system  of  careful  regulation,  as  distinguished   from  actual  control.      The  power  exists,  and 
the  means  are  at  hand,  but  we  should  be  just. 

Extract  from  a  speech  by  George  A.  Lee,  Chairman  of  the  Public  Service  Commission  of 
Washington,  before  the  Educational  club  of  the  Tacoma  Gas  Company,  Tacoma.  Washington  (Pub- 
lic Service,  May,  1913,  page  167) : 

Public  service  regulation  as  evidenced  by  the  public  service  commission  law  of  Washington, 
is  the  alternative  of  municipal  control  and  ownership.  Such  regulation  alTords  and  secures  all  the 
alleged  benefits  and  advantages  of  municipal  ownership  without  the  evils  and  disadvantages  incident 
thereto.  If  such  regulatory  laws  secure  good  service  and  reasonable  rates  and  safe  and  efTicient  in- 
strumentalities and  facilities  then,  certainly,  there  can  be  no  logical  or  conclusive  argiunent  in  behalf 
of  the  surrender  of  such  regulation  for  the  experimental  and  dangerous  plan  of  municipal  ownership. 
In  my  judgment  the  passage  of  public  service  laws  in  many  states  within  the  last  few  years  marks  a 
new  regime  and  gives  the  public  that  service  and  those  rates  to  which  they  are  entitled  and  gives  the 
companies  that  rate  of  return  which  the  constitution  permits  them  and  at  the  same  time  avoids  the 
dangers  and  pitfalls  of  municipal  regulation  and  municipal  ownership. 

Extract  from  speech  of  President  Woodrow  Wilson,  at  a  meeting  of  the  Federation  of  Demo- 
cratic Clubs  in  Pennsylvania,  held  at  liarrisburg,  June  15,  1911.  (Reprinted  in  the  Congressional 
Record.  August  14,  1912,  page  11824): 

The  regidation  of  corporations  is  hardly  less  significant  and  central.  We  have  made  many 
experiments  in  this  difficult  matter,  and  some  of  them  have  been  crude,  and  hurtful,  but  our  thought 
is  slowly  clearing.  We  are  beginning  to  see,  for  one  thing,  how  public  service  corporations,  at  any 
rate,  can  be  governed  with  great  advantage  to  the  public  and  without  serious  detriment  to  themselves, 
as  undertakings  of  private  capital.  Experience  is  removing  both  ])rcjndice  and  fear  in  this  field,  and 
it  is  likely  that  within  the  very  near  future  we  shall  have  settled  down  to  some  common,  rational,  and 
effective  policy.  The  regulation  of  corporations  of  other  sorts  lies  intimately  connected  with  the  gen- 
eral question  which  ramifies  in  a  thousand  directions,  but  the  intricate  threads  of  which  we  are  slowly 
beginning  to  perceive  constitute  a  decipherable  pattern.  Measures  will  licre  also  frame  themselves 
soberly  enough  as  we  think  our  way  forward. 

From  President  Taft's  Special  Message  to  Congress,  February  22,  1912.  (Reprinted  in  the 
New  York  Times,  February  23,  1912)  : 

This  presents  the  question  of  government  ownership  of  public  utilities,  which  are  now  being  con- 
ducted by  private  enterprise  under  franchises  from  the  government.  I  believe  that  the  true  principle 
is  that  private  enterprises  should  be  pemiitted  to  carry  on  such  public  utilities  under  due  regulation  as 
to  rates  by  proper  authority,  rather  than  that  the  government  should  itself  conduct  them.  This  pin- 
ciple,  I  favor,  because  I  do  not  think  it  in  accordance  with  the  best  public  policy  thus  greatly  to  increase 
the  body  of  public  servants. 

Extract  from  a  speech  delivered  by  ex-President  Roosevelt  on  October  19,  1905,  at  Raleigh, 
N.  C.  (Mitchell,  S.  D.,  Republican,  December  4,  1913)  : 

I  do  not  believe  in  government  ownership  of  anything  which  can  with  propriety  be  left  in  pri- 
vate hands,  and  in  particular  I  should  most  strenuously  object  to  government  ownership  of  railroads. 
But  I  believe  with  equal  firmness  that  it  is  out  of  the  question  for  the  government  not  to  exercise  a 
supervisory  and  regulatory  right  over  the  railroads ;  for  it  is  vital  to  the  well  being  of  the  public  that 
they  should  be  managed  in  a  spirit  of  fairness  and  justice  toward  all  the  public.  Actual  experience 
has  shown  that  is  it  not  possible  to  leave  the  railroads  uncontrolled. 

(Editorial) 

Atlanta,  Ga.,  Constitution,  December  19,  1913: 

It  must  be  remembered  that  in  this  country  we  have  now  all  the  advantages  and  none  of  the 
disadvantages  of  government  ownership.    We  have  strict  government  regulation  of  prices  and  prac- 

93 


tices.  We  can  enforce  reasonable  rates.  And  the  Government  has  nothing  whatever  of  the  respons- 
ibiHty.  This  is  not  to  reckon  with  the  enormous  sum  in  taxes  paid  to  the  states  and  nations.  This 
would  be  lost  under  government  ownership. 

Springfield,  Mass.,  Republican,  December  18,  1913: 

President  Taft's  Postmaster,  Mr.  Hitchcock,  recommended  government  ownership  of  telegraph 
lines  without  including  telephone  lines.  President  Taft  did  not,  however,  endorse  the  idea — Mr.  Wick- 
ersham,  his  attorney-general,  no  doubt  voiced  Mr.  Taft"s  view  in  a  letter  to  the  Interstate  Commerce 
Commission  about  a  year  ago,  in  which  telegraph  and  telephone  business  was  declared  to  be  a  natural 
monopoly,  impossible  to  run  on  competitive  lines,  yet  best  run  to  "the  reasonable  satisfaction  of  the 
public  under  Government   control  and   regulations   with  private  ownership  retained." 

*******  *  *  *  * 

Government  regulation  of  the  telegraph  and  telephone  companies  has  not  been  tried  out ;  the 
Interstate  Commerce  Commission  has  had  jurisdiction  over  them  but  for  a  very  short  time.  Give  this 
policy  a  trial  first  of  all. 

Philadelphia,  Pa.,  Public  Ledger,  October  26,  1913 : 

President  Wilson  carefully  weighed  the  matter  of  the  two  alternatives  of  private  and  Govern- 
ment regulation  and  of  Government  ownership  and  management,  and  he  said:  "Government  regu- 
lation may  in  most  cases  suffice.  Indeed,  such  are  the  difficulties  in  the  way  of  establishing  and  main- 
taining careful  business  management  on  the  part  of  the  Government,  that  control  ought  to  be  preferred 
to  direct  administration  in  as  many  cases  as  possible — in  every  case  in  which  control  without  adminis- 
tration can  be  made  effectual." 

Joliet,  111.,  Herald,  October  24,  1913: 

Mere  cheapness  is  a  secondary  consideration  with  the  American  people.  We  must  have  ser- 
vice even  if  we  have  to  pay  for  it.  We  cannot  expect  Pullman  seats  at  immigrant  rates,  but  we  are 
not  going  to  drive  a  public  ownership  policy  to  the  point  where  we  shall  have  emigrant  seats  at  Pull- 
man prices. 

Regulation,  not  confiscation,  is  the  solution  of  the  telegraph  and  telephone  problem. 

Brooklyn,  N.  Y.,  Daily  Eagle,  October  2,  1913: 

Government  ownership  and  operation  of  telegraph  and  telephone  lines  would  be  a  venture  for 
which  no  substantial  justification  could  anywhere  be  found.  Government  control  of  these  utilities  in 
foreign  countries,  particularly  in  France,  has  not  been  a  success.  We  do  not  need  to  repeat  foreign 
experiments  and  foreign  failures  here.  No  substantial  interest  is  asking  for  the  change.  Government, 
Federal  and  State,  either  now  has  or  can  obtain  sufficient  power  of  regulation  over  telegraph  and  tele- 
phone companies  to  protect  the  public  against  extortionate  rates  and  inefficient  service.  That  power 
already  resides  in  the  State  of  New  York,  and  such  protection  is  all  the  public  requires.  Power  to 
regulate  is  all  that  Government  should  seek  or  expect  in  relation  to  these  public  utilities  which  are 
essentially  enterprises  for  private  operation  not  fields  for  wild  experiments  in  State  Socialism. 

Extract  from  the  Report  to  the  Board  of  Trustees,  New  Seattle  Chamber  of  Commerce,  Seattle, 
Washington,  submitted  January  17,  1913,  by  the  Executive  Committee  Bureau  of  Taxation: 

The  establishment  of  a  municipal  telephone  system  can  be  justified  only  upon  the  ground  that 
it  is  necessary  to  insure  good  service  and  reasonable  rates  from  the  present  system ;  a  need  which  is  at 
present  filled  by  the  Public  Service  Commission  with  which  any  citizen  may  lodge  complaint. 

Extract  from  the  report  of  the  Department  on  Regulation  of  Interstate  and  Municipal  Utilities 
to  the  National  Civic  Federation,  January,  1913: 

Whatever  may  be  the  views  of  any  individual  regarding  the  desirability  of  having  the  State  reg- 
ulate the  conduct  of  public  utility  enterprises,  all  must  agree  that  the  signs  of  the  times  point  clearly 
in  one  of  two  directions — either  to  public  ownership  and  operation,  or  to  public  regulation  of  private 

94 


ownership  and  operation.  Competition,  relied  upon  in  the  earlier  days  to  protect  supposed  public  in- 
terests, has  failed  completely.  Competition  in  a  public  service  business  is  war,  and  General  Sherman's 
description  of  war  applies  as  well  to  the  public  service  industry  as  to  the  battlefield.  The  furnishing  of 
a  transportation,  gas,  water,  electric,  telephone  or  other  public  service  is,  and  should  be,  naturally  a 
monopoly.  Unregulated  monopoly  in  any  field  of  endeavor  is  abhorrent  to  Anglo-Saxon  people. 
While  regulation  of  public  utilities  must  be  based  on  full  recognition  of  the  monopolistic  character  of 
the  business,  it  is  also  true  that  recognition  of  monopoly  invites  public  regulation  or  public  ownership 
and  operation.  The  Department  believes  not  only  that  public  regulation  is  preferable  to  public  owner- 
ship and  operation,  but  that  public  ownership  and  operation  may  be  deferred  only  by  reasonable  public 
regulation. 

From  statement  by  Cardinal  Gibbons,  published  in  the  Neiv  York  Evening  Stin,  September  4, 
1912: 

I  believe  in  the  proper  regulation  of  big  business  combinations  and  the  broadminded  at  the  head 
of  these  vast  business  enterprises  would,  I  am  sure,  welcome  fair  and  intelligent  Government  control. 
Such  control  should  be  of  a  nature  to  assure  the  people  good  service  at  prices  which  would  protect 
the  honest  investor,  it  should  prevent  industrial  warfare,  should  end  political  interference  and  should 
encourage  honest  effort  to  serve  the  people  with  the  utilities  which  they  require. 

It  must  be  remembered  by  those  who  so  foolishly  demand  public  and  Government  ownership 
that  year  by  year  the  great  public  utility  corporations  are  becoming  more  and  more  the  property  of  the 
public. 

For  instance,  five  years  ago.  when  Theodore  X.  \'ail  became  President  of  the  American  Tele- 
phone Company,  there  were  18,000  stockholders ;  now  there  are  over  50,000.  This  corporation  serves 
25,000,000  people  daily.  In  1901  the  Baltimore  &  Ohio  Railroad  had  3.256  stockholders ;  now  it  has 
over  11,000.  Ten  years  ago  the  Pennsylvania  Railroad  had  27,870  stockholders;  now  it  has  over  73,- 
000.  In  the  same  period  the  Great  Northern  Railroad  has  increased  its  stockholders  from  700  to  18,- 
000 ;  the  New  York  Central  from  9,872  to  over  22,000.  At  the  present  time,  it  is  stated  by  authorities, 
the  owners  of  the  railroads  in  the  United  States  number  not  less  than  2,000,000  people. 

When  there  are  added  to  these  the  owners  of  stocks  and  bonds  in  other  public  service  corpora- 
tions, it  will  be  apparent  to  all  fair  men  that  public  ownership  of  the  proper  kind  is  already  here.  Mil- 
lions of  our  people  have  a  direct  and  personal  interest  in  the  public  serving  business,  and  they  are  not 
going  to  be  misled  by  any  of  the  un.'ounded  and  theoretical  beliefs  of  the  Socialists  of  Government 
ownership. 

From  the  "Principles  of  Economics,"  Vol.  II,  Book  VII,  Chapter  62,  pp.  417-418,  by  F.  W. 
Taussig,  Professor  of  Political  Economy  at  Harvard  University,  1911: 

For  the  present,  however,  and  as  far  in  the  future  as  we  can  see,  the  main  task  before  demo- 
cracy in  America  is  that  of  making  more  simple  and  smooth-working  its  political  machinery ;  of  secur- 
ing plain  honesty  and  routine  efficiency  in  the  accepted  functions  of  government;  and  of  regulating 
with  some  tolerable  success  the  industries  of  the  monopoly  type.  When  good  results  in  these  compara- 
tively simple  problems  have  been  achieved,  it  will  be  time  to  turn  to  the  larger  and  more  complex 
problem  of  public  industr>'  on  a  greatly  extended  scale. 

From  the  "Principles  of  Economics,"  Vol.  II,  Book  VII,  Chapter  62,  p.  413,  by  F.  W.  Taus- 
sig, Professor  of  Political  Economy  at  Harvard  University,  1911: 

The  clear  alternative,  then,  and  only  alternative,  to  public  management  is  public  regulation. 
Ideally,  regulation  is  less  good,  but  practically  it  may  l)e  much  better.  Reasonably  successful  regulation 
is  more  easy  to  attain  than  reasonably  successful  public  management. 

Statement  made  by  Charles  E.  Hughes,  Justice  of  United  States  Supreme  Court  and  ex-Gov- 
ernor of  New  York,  in  an  address  on  January  31,  1908,  in  New  York  City: 

I  do  not  believe  in  governmental  ownership  of  railroads.    But  regulation  of  interstate  transpor- 

95 


tation  is  essential  to  protect  the  people  from  unjust  discriminations  and  to  secure  safe,  advantageous 
and  impartial  service,  upon  reasonable  terms  in  accordance  with  the  obligations  of  common  carriers. 

Extract  from  "The  Problem  of  Monopoly,"  (1904,  Chapter  6.  Pages  115  and  120),  by  J.  B. 
Clark,  Professor  of  Political  Economy  at  Columbia  University : 

The  difference  {i.  e.  in  public  benefits)  between  a  thorough  system  of  governmental  regulation 
and  a  system  of  governmental  ownership  is  by  no  means  as  wide  as  it  appears;  and  what  difference 
there  is,  is  in  favor  of  the  regulated  private  ownership.  Such  ownership,  if  unregulated,  has  little  to 
commend  jt.  *  *  *  We  would  better  make  a  thorough  test  of  the  alternative  plan  and  adjourn  the 
question  of  public  ownership  till  the  plan  of  public  control  shall  have  been  proved  a  failure. 

*********** 

That  it  is  wise,  before  resorting  to  government  ownership,  to  experiment  with  regulation  more 
earnestly  and  judiciously  than  we  have  ever  done,  is  sufficiently  clear. 

Extract  from  "Modern  IndustriaHsm,"  (1904,  Part  III,  Chapter  4,  Pages  271-272),  by  P.  L. 
McVey,  President  of  the  University  of  North  Dakota: 

*  *  *  It  is,  therefore,  impossible  to  say  "a  priori"  that  a  government  shall  own  and  operate 
its  great  industries.  Each  State  must  determine  what  things  it  can  do  best.  The  day  of  laissez  faire 
has  passed  and  regulation  or  ownership  will  be  the  method  of  conducting  industry.  Experience  in 
trusting  elaborate  industrial  functions  to  a  democracy  is  not  large,  and  where  tried,  not  convincing  in 
its  results.  A  nation  must  first  have  the  necessary  civic  capacity  before  it  can  successfully  cope  with 
the  great  industrial  problems  and  even  then  the  union  of  economy  and  enterprise  is  not  assured.  In 
the  control,  even  of  the  ownership  of  monopolies,  the  State  has  a  field  of  action  to  which  it  may  well 
confine  its  efforts. 

Extract  from  "American  Railway  Transportation,"  (1903,  Part  4,  Chapter  29,  Page  427),  by 
E.  R.  Johnson,  Professor  of  Transportation  and  Commerce,  University  of  Pennsylvania: 

The  regulation  of  railroads  in  the  United  States  is  apparently  not  to  be  accomplished  by  means 
of  Government  ownership.  The  commission  system  has  been  on  trial  in  the  States  for  thirty  years  and 
in  the  National  Government  for  sixteen  years,  and  while  the  results  accomplished  are  not  fully  satis- 
factory, the  system  has  not  been  a  failure.  The  success  of  the  Federal  commission  has  been  far  less 
than  it  might  have  been  had  the  demonstrated  defects  in  the  law  of  1887  been  corrected;  but  the  wis- 
est plan  for  the  United  States  to  follow,  at  least  in  the  immediate  future,  is  to  improve  the  methods 
and  agencies  of  regulation  now  being  employed,  rather  than  to  attempt  the  enormous  task  of  purchas- 
ing and  operating  two-fifths  of  the  railway  mileage  of  the  world. 


POST  OFFICE 

(Official) 

From  "Public  Finance"  (1899,  Part  II,  Chapter  9,  Pages  215-218),  by  W.  M.  Daniels,  for- 
merly of  the  Department  of  Political  Economy,  Princeton  University,  and  recently  appointed  by  Pres- 
ident Wilson  member  of  the  Interstate  Commerce  Commission: 

The  post-office,  upon  investigation,  proves  to  be  unique  in  more  ways  than  one.  The  risks  in- 
volved in  the  ordinary  processes  of  trade  and  manufactures  are  wholly  absent.  The  system  of  trans- 
portation of  which  it  avails  itself  is  ready  to  its  hand.  "It  has  made  use  of  existing  and  well-known 
agencies,  where  the  only  dirTicuhy  was  one  of  organization,"  says  I^ord  Farrer,  who  adds:  "It  is  a 
merit  of  the  undertaking,  regarded  as  an  official  institution,  that  there  is  very  little  of  that  speculative 
element  about  it  which  is  the  life-blood  of  commercial  activity."    The  capital  which  the  state  is  required 

96 


to  furnish  is  comparatively  small  in  amount.  »  ♦  «  Add,  finally,  to  the  other  i)eculiar  char- 
acteristics of  the  post-office  this,  that  an  increase  in  its  volume  of  business  does  not  ordinarily  involve 
a  corresf)onding  increase  in  its  working  expenses,  and  that  the  great  fKDStal  reforms  and  improvements 
have  as  often  been  forced  upon  the  department  from  outside  as  they  have  originated  within  its  own 
official  circle,  and  we  are  in  a  position  to  understand  why,  as  Adam  Smith  says,  it  is  "the  only  mer- 
cantile project  which  has  been  successfully  managed  by  *  *  *  every  sort  of  government."  Where 
other  enterprises  call  for  venturesome  and  speculative  activity,  the  post-office  refiuires  orderly  routine ; 
where  the  former  demand  much  fixed  capital,  the  post  needs  comparatively  little ;  where  in  ordinary 
business  transactions  prices  vary  even  for  the  same  service,  the  post-ol1ice  has  always  one  price  for  the 
same  service;  where  other  industrial  enterprises,  if  mismanaged,  long  escape  exposure  and  protest,  the 
Argus-eyed  public  is  daily  inspecting  the  efficiency  of  the  postal  service;  where  the  freight  agent  is 
puzzling  over  a  complicated  railway  tariff,  the  postal  clerk  has  the  same  simple  regulations  to  guide 
him  to-day  and  to-morrow. 

From  Table  Xo.  4.  "Comparison  of  Postal  Revenues,  Expenditures,  Etc.,  Fiscal  Years  1837  to 
1912,  Inclusive." — Report  of  the  Auditor  for  the  Post  ( )lVice  Dejjartment,  in  Postmaster  General's  Re- 
port for  Year  Ending  June  30,  1912  (.Page  335).  It  should  be  noted,  in  connection  with  the  figures 
given  below,  that  the  accounts  include  only  those  audited  by  the  Auditor  for  the  Post  Office  Depart- 
ment, and  that  the  Auditor  for  the  Treasury  Department  audits  other  expenses  of  the  postal  service, 
not  included  in  the  Postmaster  General's  Report.  The  total  net  deficit  'rom  the  operation  of  the  Post 
Office  Department,  1837-1912,  according  to  the  figures  shown  below,  is  $330,725,306.29. 

Audited  Postal  Audited  Postal  Audited  Postal  Audited  Postal 

Fiscal  Year.                Surf<lus.                     Deficit.       Fiscal  Year.                Sur/^lus.  Deficit. 

1837*                $  813,384.58  187?  '   $6,820,320.84 

1838                   $      191,928.75        1876                   4,647,2.=;3.04 

1839  151,879.61         1877  6,127,356.02 

1840  174,713.72        1878  4,905,029.28 

1841  91,960.46        1879  3,415,933.00 

1842  1,124,213.30        1880  3,221,953.48 

1843  78,618.84        1881  2,821,959.11 

1844  61,340.12        1882  1.253,923.57 

1845  36,850.13        1883  2,181,352.57  

1846  633.318.22        1884  3,907,057.29 

1847  200.819.16        1885  7,481,410.22 

1848  174,751.47  1886  7,068,495.10 

1849  227,512.56  1887  4,145,018.20 

1850  286.739.94  1888  3,772,466.03 

1851  131,894.62  1889  6,169,104.44 

1852  1,923.022.85  1890                   5,400,764.44 

1853  2,742.364.67  1891                   7,150,610.13 

1854  2,352,699.98  1892                   6,110,975.97 

1855  3,326.856.15  1893                   5,716,788.75 

1856  3,487.046.52  1894                   9.977,515.32 

1857  4.153,718.40  1895                   10,230,442.13 

1858  5,234,843.70  1896                   8,444,201.31 

1859  3,489,028.26  1897                   11,431,579.41 

1860  10.652,538.66        1898  9.054,551.75 

1861  5,251,966.98        1899  6,630,135,60 

1862  2,826,144.35         1900  5,410,358.10 

1863  142,625.14        1901  3,981,520.71 

1864  404,814.72        1902  2,961,169.91 

•The   office  of   Auditor   for   the   Post   Office    Department   wa»  crcned  by  act  of  TongreM  approved  July  2,   1836. 

97 


Audited  Postal  Audited  Postal  Audited  Postal  Audited  Postal 

Fiscal  Year.                 Surplus.                     Deficit.       Fiscal  Year.  Surplus.                     Deficit. 

1865  917,249.50 1903  4,586,977.16 

1866  933,851.10  1904  8,812,769.17 

1867  3,972,351.92  1905  14,594,387.12 

1868  6,545,348.20  1906  10,542,941.76 

1869  6,363,737.20  1907  6,692,031.47 

1870  5,097,854.11  1908  16,910,278.99 

1871  4,358,752.21  1909  17,479,770.47 

1872  4,749,094.11  1910  5,881,481.95 

1873  6,128,892.84  1911  219,118.12  

1874  5,757,908.07  1912  1.785,523.10 

From  articles  in  the  North  American  Reviezv,  June  and  July,  1902,  on  "Defects  and  Abuses  in 
Our  Postal  System,"  by  Henry  A.  Castle  (then  Auditor,  United  States  Post  Office  Department)  : 

All  public  men  and  patriotic  citizens  should  know  more  about  the  postal  service,  take  a  more 
lively  interest  in  it,  watch  its  development  carefully,  and  guard  its  integrity  with  jealous  zeal.  It  is  an 
exceedingly  vital  part  of  our  government  polity — all  the  more  vital  because  it  is,  strictly  speaking,  not 
a  public  function  at  all,  but  is  more  probably  a  private  or  corporate  enterprise  engrafted  on  the  gov- 
ernment's mechanism  under  pressure  of  an  imperious  necessity. 

*         *         * 

All  the  avoidable  abuses  are  not  actually  existent.  Many  are  only  in  embryo,  but  with  well  ma- 
tured aspirations,  already  menacing.  The  irrepressible  enthusiast  who  disclaims  against  government 
by  injunction  is  loudest  in  advocating  further  innovations  that  would  soon  lead  to  government  in  the 
hands  of  a  receiver.  There  is  loud  and  influential  demand  for  the  postal  telegraph,  postal  savings 
bank,  and  a  postal  life  insurance  bureau.  There  are  wild,  vague  cries  for  the  absorption  of  all  rail- 
ways under  government  ownership  and  Post  Office  Department  management. 

It  may  be  true  that  the  government  could  send  out  telegrams  at  reduced  rates  and  pay  expenses ; 
but  little  compact  England  has  lost  $3,500,000  a  year  trying  to  do  it,  and  is  very  weary  of  the  experi- 
ment. 

*.♦  *  *  *  *  *  *  *  *  * 

The  fallacy  of  calling  our  postal  system  self-sustaining  even  if  on  the  face  of  the  books  and  on 
its  present  foundation  it  should  fail  to  show  a  deficit  at  the  close  of  some  fiscal  year,  does  not  occur  to 
casual  observers,  but  it  is  recognized  by  all  who  study  the  subject.  A  railway  company  doing  a  busi- 
ness of  nearly  $1,000,000,000  a  year,  which  was  required  to  pay  no  interest  on  bonds  or  dividends  on 
stock  would  be  a  financial  phenomenon.  It  is  conceivable  that  the  mail  service  might  be  so  managed 
by  a  corporation  as  to  yield  satisfactory  results  and  pay  a  small  dividend,  provided  it  performed  no 
gratuitous  services  for  the  government  as  a  condition  of  its  existence.  As  now  managed  the  Post 
Office  Department  has  no  "plant"  whatever.  All  it  owns  in  the  way  of  personal  property  is  mail  bags, 
mail  locks,  letter  boxes,  carrier's  bags  and  a  few  similar  inconsequential  items  of  equipment.  Even  in 
public  buildings  it  is  the  tenant  of  the  Treasury  Department. 

(Editorial) 

Chicago,  111.,  Journal,  December  22,  1913: 

Postmaster  General  Burleson  spoke  of  government  telegraphs  and  telephones  as  being  fore- 
shadowed by  the  parcel  post  and  postal  savings  bank.  The  reference  is  not  happy.  Only  last  week 
Mr.  Burleson  asked  for  an  immediate  emergency  appropriation  of  $1,000,000  to  run  the  parcel  post 
till  next  June.  No  one  knows  or  can  know  for  at  least  a  year  to  come  whether  the  parcel  post  will 
pay  its  own  way  or  not.  As  for  postal  savings  banks,  the  amount  on  deposit  in  these  institutions  on  the 
latest  date  for  which  figures  are  available  was  $35,392,622 — about  40  cents  per  capita  for  the  American 
people. 


Washington,  D.  C,  Post,  December  20,  1913: 

Replying  to  the  objection  that  government  monopoly  in  Europe  has  proved  a  failure  financial- 
ly in  ever>-  such  undertaking.  Postmaster  General  Burleson  remarks  that  our  postal  service  is  self-sus- 
taining. But  it  we  ask  what  made  it  pay  expenses,  whether  by  means  of  its  own  activities  or  by  legis- 
lation which  gave  it  a  big  advantage  over  private  enterprise,  the  ground  is  cut  from  under  the 
argument.  An  act  of  Congress  sufficed  to  give  the  post  office  department  the  right  to  compete  with  the 
express  companies,  without  consulting  public  opinion.  But  when  it  comes  to  binding  the  government 
to  incur  the  enormous  expense  involved  in  the  purchase  of  telephones  and  telegraphs  and  depleting  all 
the  State  treasuries  of  their  income  now  derived  from  taxes  and  franchises  assessed  against  the  com- 
panies owning  the  lines,  some  15,000,000  voters  may  be  on  their  feet  demanding  the  last  word  in  the 
transaction. 

Rochester,  N.  Y.,  Herald,  December  20,  1913: 

The  delivery  of  a  letter  is  a  comparatively  simple  undertaking.  It  may  be  trusted  to  men  of  no 
technical  mechanical  training  or  skill.  It  need  be  performed  with  only  a  moderate  degree  of  celerity. 
It  requires  a  comparatively  small  permanent  investment  in  plant.  It  is,  in  a  word,  a  simple  function 
whose  processes  are  easily  understood  by  both  the  servant  and  the  served ;  yet  with  all  these  elements 
contributing  to  the  efficiency  and  ease  of  performance,  there  is  continual  complaint  that  the  mail  ser- 
vice does  not  satisfy  expectations  or  needs.  *  *  *  This  being  true  of  thj  mail,  how  much  more  true 
would  it  be  of  the  vastly  more  difficult  and  more  urgent  service  of  the  telephone  and  telegraph  under 
Government  operation. 

Boston  News  Bureau,  December  20,  1913 : 

Now  the  notable  circumstance  is  that  so  far  no  good  reason  is  given  why  Uncle  Sam  should 
tackle  the  new  job.  Waiving  contention  as  to  legal  power — which  Mr.  Mackay  does  contest — the  only 
definite  reason  advanced  by  the  Postmaster  is  that  success  in  parcel  post  administration  demonstrates 
federal  capacity  to  run  telephone  and  telegraph,  since  these  also  are  means  of  communication,  and  their 
scope  is  so  big  that  federal  "unselfishness"  is  needed.  Here  is  the  fallacy  of  the  undisturbed  middle,  as 
regards  "means  of  communication,"  embracing  letter,  parcel,  telegram,  and  telephone  call  as  being  iden- 
tical in  substance  and  treatment.  As  well  say  that  canoe  and  dreadnought  make  equal  demands  on 
builder  and  user.    Here  is  ignored  the  fundamental  distinction  of  character. 

The  other  difference  of  character  as  between  federal  conduct  and  private  conduct  of  large  en- 
terprises should  by  now  have  impessed  itself  on  the  citizens'  consciousness.  Governmental  costs 
average  close  to  50  per  cent,  above  those  of  competing  private  enterprise  wherever  comparison  is  pos- 
sible. The  Aldrich  assertion  as  to  $300,000,000  annual  waste  has  since  been  little  curtailed  by  efficiency 
commissions ;  the  testimony  of  the  Burleson  and  Lewis  proposals  would  be  to  multiply  it. 

New  York  Press,  December  19,  1913: 

Mr.  Don  C.  Seitz,  a  well  trained  and  very  successful  manager  of  a  large  publishing  concern,  gave 
Congress  a  flat  challenge  only  a  few  months  ago.  If  Congress  and  the  rest  of  the  Government  would 
confer  upon  him  the  necessary  license,  he  offered,  within  a  few  days  to  form  a  syndicate  to  take  over 
and  operate,  as  a  private  enterprise,  the  whole  post  office  system,  under  Government  regulation  and  to 
give  a  vastly  and  more  frequent  [sic)  postal  service  than  is  now  given  by  the  Government,  and  to  lower 
postage  rates  for  all  classes  of  business,  except,  of  course,  the  oceans  and  oceans  of  Congress'  own 
"dead  head"  stuff. 

New  York  World,  December  19,  1913: 

The  World  has  extensive  business  relations  with  the  post  office  department.  It  is  one  of  the 
principal  patrons  of  the  telegraph  companies  and  the  telephone  company.  We  can  assure  Mr.  Burleson 
that  if  the  telegraph  and  telephone  service  that  we  pay  for  was  as  incompetent  and  unsatisfactory  as 
the  postal  service  that  we  pay  for,  it  would  be  very  difficult  indeed  to  print  a  great  newspaper.  We  can 

99 


further  assure  him  that  it  will  be  a  sorry  day  for  this  country  if  intelligent  American  sentiment  ever 
countenances  the  placing  of  all  revenues  and  channels  of  written  and  spoken  communications  under 
the  autocratic  control  of  a  partisan,  political,  post  office  department. 

Buffalo,  N.  Y.,  Evening  News,  December  19,  1913: 

It  is  only  within  the  last  year  or  so,  or  since  the  directorship  of  Postmaster-General  Hitchcock 
that  the  government  showed  even  a  penny  of  profit.  That  is  done  by  taking  off  a  great  mass  of 
service  that  costs  a  great  deal  and  yet  is  not  charged  as  it  should  be,  but  it  is  due  also  to  a  miserable 
service  in  many  places. 

Buffalo  has  suffered  not  a  little  in  that  respect.  Complaints  have  gone  to  Washington  for  a 
score  of  years  without  improvement  to  speak  of.  In  fact,  there  have  been  years  not  very  far  behind 
us  when  citizens  ceased  complaining  because  it  was  hopeless.  This  does  not  imply  fault  in  the  local 
managers,  but  fault  in  the  general  policy  of  the  de])artment  about  equipment  and  facilities  for  han- 
dling the  mails  in  the  best  way. 

Mr.  Burleson's  suggestion  that  the  government  spend  several  hundreds  of  millions  in  acquiring 
the  wire  service  of  the  country  and  take  on  its  payroll  some  hundreds  of  thousands  of  operatives, 
comes  at  a  time  when  the  Postmaster-General  in  Great  Britain,  where  the  telegraph  service  is  a  public 
monopoly,  is  compelled  to  go  to  Parliament  for  an  enormous  subsidy  in  order  to  put  his  department 
on  a  living  basis.  It  has  become  so  run  down  under  the  endeavor  to  operate  it  so  as  to  make  a  better 
showing  than  when  it  was  in  private  hands. 

Syracuse,  N.  Y.,  Journal,  December  19,  1913: 

The  people  of  Syracuse  don't  want  an  agitation  of  the  purchase  of  any  other  "transportation 
adjunct"  to  the  postal  service  until  the  efficiency  of  the  postal  service  has  been  raised;  and  they  but 
echo  the  voice  of  protest  of  the  entire  country  because  the  inequalities  and  inefficiencies  in  the  service 
in   this   city   are   probably   duplicated    in   every   city  in  the  United  States. 

Troy,  N.  Y.,  Record.  December  19,  1913: 

The  plan  of  Postmaster-General  Burleson  for  goverinncnl  ownership  of  the  telegraph  and  tele- 
phone lines  would  receive  more  attention  from  the  people  if  he  first  would  perfect  the  govermnent 
postal  system.  The  room  for  improvement  in  that  service  is  so  great  that  he  can  find  plenty  of  room 
for  active  and  effective  work  without  having  the  national  wire  lines  added  to  his  burdens.  Besides,  the 
people  just  now  are  not  in  a  mood  to  have  the  tcUgraph  and  telephone  oftices  organized  as  are  those 
of  the  postal  department,  with  non-working  heads  drawing  large  salaries  merely  for  political  reasons. 

Springfield,  Mass.,  Morning  Union,  December  19,  1913: 

Meanwhile  the  difference  between  conducting  a  postal  service  over  privately  owned  railroads 
and  by  means  of  j)rivately  owned  cars  and  the  purchase  outright  and  operation,  independently,  of  pri- 
vate interest,  of  the  telephone  and  telegraph  systems,  is  clearly  apparent.  Mr.  Burleson  says  that 
other  principal  countries  have  government  owned  telegraph  and  telephone  systems,  but  he  neglected  to 
state  that  not  one  of  those  countrics'has  a  .system  that  ajiitroaches  in  efficiency  the  American  systems. 

Newburgh,  N.  Y.,  Journal,  December  18,  1913: 

Assuming  that  Mr.  Burleson's  figures  are  correct,  however,  the  dividend  which  the  post  office 
department  is  alleged  to  have  declared,  the  first,  it  is  admitted,  since  1883,  would  be  regarded  as  a 
pretty  poor  demonstration  of  capacity  in  the  business  world.  As  for  the  parcel  post,  it  is  still  an  ex- 
periment and  while  it  is  a  good  institution  and  one  that  is  appreciated  and  patronized  by  the  public, 
the  ([uestion  arises  whether  or  not  it  would  be  so  amazingly  profitable  if  the  Government  were  com- 
pelled to  pay  the  railroad  what  it  is  worth  to  carry  parcels. 

New  York  World,  December  18,  1913: 

Has  the  Government  sufficiently  proved  its    mastery    even    of    railroad    regulation,    let    alone 

100 


ownership  and  operation,  to  warrant  its  venture  into  these  new  fields?  When  it  has  done  so  and  when 
it  can  offer  an  economical  postal  service  which  will  attract  and  not  drive  away  business,  there  will 
be  time  enough  to  talk  about  piling  on  to  it  other  l)usinesses. 

Attleboro,  Mass.,  Sun.  December  16,  1913: 

Experience  in  the  navy  yards  where  the  ( iovcniinciit  pays  $2,000,000  more  for  a  war  ship  than 
a  private  contractor  charges,  has  been  as  illuminating  as  the  conditions  in  the  Government  printing 
office  where  type  is  still  set  by  hand  because  fewer  would  be  employed  and  at  less  expense  if  there 
were  used  the  typesetting  machines  which  even  the  smallest  private  office  owns.  By  charging  otTf  rent 
and  building  expenses  to  the  Treasury  Department,  the  po.st  office  apparently  pays  expenses  and  the 
parcel  post  has  not  yet  existed  long  enough  for  a  financial  test. 

New  York  Times,  December   12,   1913; 

"Mr.  Burleson's  comparison  with  the  parcel  [lost  is  also  an  absurdity,"  said  a  high  authority  in 
the  telephone  business.  "To  make  the  existing  postal  system  available  for  package  business,  the  de- 
partment has  only  to  add  a  clerk  here  and  there  and  fix  rates.  'Jhe  organization  was  ready.  As  for 
the  fact  that  foreign  Ciovcrnments  operate  the  wire  systems,  it  should  be  remembered  that  the  older 
nations  were  monarchies,  with  all  powers  in  the  hands  of  the  ruler.  They  have  gradually  been  work- 
ing down  to  democracy.  Here  we  started  as  a  democracy  with  property  and  rights  in  the  hands  of 
the  individuals,  and  it  is  proposed  to  vest  these  rights  in  the  central  government.  Money  cannot  buy 
an  organization,  nor  the  brains  that  have  created  it.  It  is  a  thing  of  very  slow  growth,  which  can  be 
killed  over  night. 

Philadelphia,  Pa.,  Public  Ledger,  October  3,  1913: 

The  Post  Office  Department  has  been  managed  with  far  less  efficiency  and  economy  than  any  of 
the  great  industrial  companies  or  the  railroads.  Political  expediency  rather  than  a  good  service  has 
for  many  years  been  the  policy  in  that  Government-owned  institution. 

Toledo,  Ohio,  Blade,  October  7,  1913  : 

Before  we  have  Government-run  telegraph  offices  and  Government-owned  telephones,  let  us 
feel  certain  that  the  Government  can  do  it  without  having  to  ask  Congress  to  make  up  its  losses  on 
telegraph  and  telephone  service  as  it  has  to  ask  it  to  cover  the  losses  on  the  handling  and  delivery  of 
the  mails. 

New  York  Press,  October  4,  1913: 

The  Government  already  had  all  the  necessary  machinery  in  existence  and  in  operation,  for  the 
continuance  of  the  postal  business.  It  had  the  offices,  it  had  the  expert  managers  and  superintendents, 
it  had  the  trained  men,  it  had  the  established  routes  by  railroad,  water,  horse  and  land.  It  already 
had  virtually  everything  that  was  essential  to  the  success  of  the  postal  business.  It  had  it  working  out 
under  the  test  of  long  experience.  All  it  had  to  do,  in  fact,  was  to  chuck  the  parcel  post  system  into 
the  post  office  system  and  let  it  go  at  that. 

But  it  hasn't  any  telegraph  service.  Outside  of  military  specialists  it  hasn't  any  expert  that 
knows  the  fine  points  about  the  telegraph  service.  It  hasn't  any  facilities  for  conducting  the  tele- 
graph business.  Unless  it  took  over  the  whole  telegraph  business  as  it  stands  with  all  the  persons  now 
engaged  in  the  telegraph  business  to  help  out  the  Government,  it  couldn't  operate  in  that  field  the  way 
it  operated  in  the  parcel  post  field. 

From  article  entitled,  "The  Abuse  of  the  Congressional  Frank,"  by  Robert  D.  Ileinl.  published 
in  Leslie's  Weekly  (New  York),  January  30,  1913: 

*  A  member  of  Congress  who  is  a  candidate  for  re-election  can  have  his  political  documents 
printed  in  the  Congressional  Record,  and  then  as  has  been  explained  he  can  send  them  through  the 
mails  free  of  charge.    He  has  to  pay  the  actual  cost  of  printing  of  the  documents,  but  the  envelopes 

101 


for  mailing  them  with  the  congressional  frank  appropriately  stamped  on  them,  are  furnished  free, 
at  public  expense.  However,  since  he  does  not  have  to  pay  any  postage,  which  is  by  far  the  largest 
item,  he  reaches  the  voter  with  comparatively  little  expense  to  himself.  The  candidate  who  is  op- 
posing the  man  in  office  must  pay  full  postage  on  all  matter  that  he  sends  through  the  mails. 

Washington,  D.  C,  Post,  December  11,  1913: 

The  one  example  of  Government  monopoly — the  post  office  department — to  which  the  pro- 
moters of  the  scheme  can  point  with  pride,  was  created  to  fill  a  want  in  a  field  that  private  enterprise 
had  not  gone  into,  a  condition  of  affairs  and  the  only  condition,  that  gives  warrant  and  consent  to 
Government  ownership  of  utilities. 


i 


102 


BcT 


GOVERNMENTAL  AND  PRIVATE 


TELEGRAPH  AND  TELEPHONE  UTILITIES: 


AN  ANALYSIS 


AMERICAN   TELEPHONE   AND   TELEGRAPH    COMPANY 

COMMERCIAL  ENGINEER'S  OFFICE 
NEW   YORK 


\ 


American  Telephone  and  Telegraph  Company  commercial  bulletin  no.  t 

COMMERCIAL  ENGINEER  S  OFFICE  MARCH    2,  1914 


AN  ANALYSIS 
OF  A  SPEECH  OF  THE  HON.  D.  J.  LEWIS 

COMPARING 

GOVERNMENTAL  AND  PRIVATE 

TELEGRAPH    AND    TELEPHONE    UTILITIES 


The  following  discussion  of  certain  portions  of  a  speech  of  the  Hon.  D.  J.  Lewis  in  the 
House  of  Representatives,  as  reported  in  the  "Congressional  Record"  of  December  22n(l,  1913, 
has  been  prepared  to  refute  some  of  the  statements  of  advocates  of  government  ownership  of 
telegraphs  and  telephones  concerning  the  institutional  efficiency,  rates,  and  service  development 
of  the  private  telegraph  and  telephone  enterprises  in  the  United  States,  and  to  make  available 
some  significant  facts  concerning  these  phases  of  the  government  ownership  question.  However, 
as  will  be  apparent,  this  paper  is  confined  to  a  statistical  treatment  of  the  subject,  no  attempt 
being  made  to  give  other  information  of  a  discursive  character,  probably  fully  as  significant,  par- 
ticularly with  reference  to  the  quality  of  service;  and  no  social  or  economic  theories  have  been 
debated. 

Although  this  paper  is  not  intended  to  ans'i'cr  Mr.  Lewis'  general  discussions  of  the 
subject,  it  is  intended  to  correct  misinformation  as  to  the  efficiency,  rates,  and  social  development 
of  telegraphs  and  telephones  in  the  United  States;  and,  for  this  reason,  the  important  issues  of 
fact  have  been  squarely  met.  The  analysis  is,  therefore,  positive  in  character.  It  substantiates 
the  following  general  conclusions  which  are  directly  contrary  to  those  reached  by  Mr.  Lewis: 

1.  The  institutional  efficiency  of  the  American  telegraph  service,  even  on  the  basis  of  Mr. 
Lewis'  statistical  methods,  is  clearly  superior  to  that  of  any  government  telegraph  service. 

2.  Considering  the  dififerences  in  types  of  service,  especially  with  reference  to  the  normal 
differences  in  the  lengths  of  telegraph  hauls,  the  American  telegraph  rates  are  lower  than  those 
of  the  foreign  governments  even  in  terms  of  actual  currency,  and  are  probably  much  lower  in 

terms  of  the  value  of  money. 

• 

3.  The  development  of  the  telegraph  service  in  the  United  States  is  higher  than  in  most 
foreign  countries,  and,  in  all  cases  where  the  development  of  the  telegraph  service  in  foreign 
countries  is  greater  than  that  in  the  United  States,  the  foreign  development  is  clearly  due  to  the 
fact  that  the  development  of  local  and  short  haul  telephone  business  has  been  so  low  that  a  large 
part  of  the  business  normally  transacted  by  telephone  in  the  United  States  is,  in  those  countries, 
transacted  by  telegraph. 

4.  The  institutional  efficiency  of  the  American  telephone  service  is  higher  than  that  of  any 
government  system.  This  is  clearly  proved  by  the  facts,  of  which  perhaps  the  most  significant 
is  that  the  very  great  majority  of  the  government  telephone  exchanges  are  not  operated  more  than 
a  few  hours,  if  at  all,  after  sunset. 

i 


5.  The  exchange  rates  of  the  Bell  System,  in  terms  of  currency,  are  actually  lower  than  in 
several  foreign  countries  under  government  operation;  and,  in  terms  of  dollars  equated  on  the 
basis  of  the  value  of  money,  are  lower  than  in  any  foreign  country  under  any  government  sys- 
tem without  regard  to  the  limited  hours  of  service  in  the  foreign  exchanges. 

6.  The  rates  of  the  Bell  System  for  toll  telephone  service  are  considerably  lower  than 
those  of  foreign  governments,  due  to  the  fact  that  the  foreign  rates  are  particularly  high  for  short 
distances  where  the  bulk  of  the  toll  traffic  both  abroad  and  in  the  United  States  is  transacted. 

7.  The  development  of  toll  telephone  service  in  the  United  States  is  higher  than  in  foreign 
countries,  and  is  approached  only  in  those  countries  where  private  operation  has  been  an  im- 
portant factor  in  the  development  of  the  business. 

8.  Finally,  the  development  of  local  service,  both  in  terms  of  traffic  per  capita  and  of  tele- 
phones per  one  hundred  population,  is  very  much  greater  than  under  government  operation ;  and 
this  is  not  due  to  differences  in  the  character  of  American  and  foreign  peoples,  since  the  American 
development  is  equalled  in  Europe  in  those  cases  where  private  concerns  have  had  a  reasonable 
opportunity  for  the  development  of  the  utility. 

C.  I.  BARNARD, 

Commercial  Engineer. 


OUTLINE. 

Page 


ANALYSIS. 


TELEGRAPHS 

A.  As  to  the  Relative  Inefficiency  of  Private  Telegraph  Operation. 
Contention  that  U.  S.  I'ost  Office  is  not  iiietticiciU,  as  to — 

Defence  of  U.  S.  postal  deficits 2 

Alleged  efficiency  of  U.  S.  postal  personnel    5 

Statistical  proof  of  the  inefficiency  of  private  telegraph  organizations,  by — 

Comparative  statistics  for  different  countries   6 

Assumptions  as  to  economy  in  telegraph   operation   und>'r   Post  Office  manage- 
ment      9 

B.  Rates  for  Private  and  Government  Telegraph  Service. 

Couteniiuu  that  tLlegraph  rales  in  the  I'niied  States  are  relatively  high,  analyzed — 

Errors  of  fact 12 

Differences  in  methods  of  counting  chargeable   words 13 

Failure  to  include  "urgent"  rates  for  foreign  countries 14 

Failure  to  include  foreign  international   rates    14 

Statistics  of  average  receipts  per  message  erroneous  as  to  comparisons  with  those 

of  the  United  States 15 

Failure    to   take    into   account   effect  of  lengths  of   hauls  on   average   telegraph 

revenues    16 

Differences  in  cost  of  service 17 

Telegraph  deficits   17 

Fallacy  of  comparing  mail  rates  with  telegraph  rates 18 

Statement  that  telegraph  rates  in  the  United  States  have  not  been  reduced  since  1888 — 

Details  of  telegraph  rate  changes 18 

Brief  history  of  telegraph  rates  in  the  United  States  and  Europe 18 

Chicago  &  Milwaukee  Telegraph  Co.  case    18 

C.  As  to  Social  Inefficiency  or  Inadequacy  of  Private  Telegraph  Systems. 
Assumption  that  telegraph  traffic  development  in  the  United  States  is  relatively  low — 

How  European  telegraph  traffic  statistics  are  "padded" 20 

Table  showing  extent  of  "padding"    20 

Mere  comparisons  of  telegraph  traffic  not  significant :  must  be  taken  in  conjunc- 
tion with  mail  and  telephone  traffic 21 

Table   showing  comparative   development    of    First-Class    Mail,    Telegraph    and 

Telephone  Traffic  per  Inhabitant,  Year   1912 21 

Table  showing  rank  of  each  country  as  to  mail,  telegraph  and  telephone  traffic 

development   ( United  States  leading) 21 

Assumption  that  telegraph  facilities  in  the  United  States  are  relatively  inadequate — - 
Comparison  of  number  of  telegraph  offices  abroad  and  in  the  United  States  unfair 
(all  classes  of  telegraph  offices  being  included  for  foreign  countries,  but  most 
of  them  excluded  in  giving  the  United  States  count)  — 

Railroad  telegraph  offices,  constituting  more  than  half  the  total  number 
in  the  United  States,  arc  excluded  from  the  United  States  count,  but 

included  in  statistics  for  foreign  countries 23 

Telegraph-telephone  offices  arc  excluded  for  the   I'nited  States,  but  in- 
cluded for  foreign  countries 23 

Hours  of  telegraph  offices,  as  test  of  adequacy  of  telegraph  facilities. .  .     23 
Examples  of  "public  service  motive"  in  practice  (Great  Britain  and  Swit- 
zerland)       24 

Assuming  Mr.  Lewis'  test  of  ade(|uacy — ratio  of   telegrajih  offices  to  post 
offices — the  United  States  excels,  in  adequacy  of  facilities,  many  of 

the  most  important  countries  cited  by  Mr.  Lewis 25 

Summary  as  to  Telegraphs 25 


jv  Page 

II.    TELEPHONES 

A.  As  to  the  Relative  Inefficiency  of  Private  Telephone  Systems. 

Assumptions  as  to  "institutional  efficiency"    (telephone   calls   per   employee   per   an- 
num)— 

Errors  of  fact : 

In  securing  statistics  on  "institutional    efficiency"   of   foreign   countries, 

all  the  telephone  calls  have  been  divided  by  only  part  of  the  employees     26 
In  securing  statistics  on  'institutional   efficiency"   of  the   Bell   organiza- 
tion in  the  United  States,   58,134  is  quoted,  as  against  72,000,   the 

correct  figure,  according  to  Mr.  Lewis'  method 27 

Errors  of  method : 

Fallacy  of  method  of  equating  toll  and  local  calls 27 

Comparison  of  toll  calls  abroad  and  in  the  United  States  unwarranted 

because  of  prevalence  of  "two-number"  system  in  Europe 27 

E.xtcnsive  "padding"  of  foreign  statistics   27 

Local  calls  not  comparable  ("Trunkcd"  calls,  requiring  double  the  number 

of  employees,  much  higher  in  the  United  States  than  abroad)....     28 
Hours  of  service  ignored;   immeasurably   longer   in   the    United    States 

than  abroad,  requiring  far  more  extensive  labor  force 29 

Average  investment  per  tcleplione,    a    more    practical    test    of    "institutional 

efficiency,"   decidedly    favorable  to  the  United  States 30 

B.  As  to  the  Relatively  High  Prices  of  Private  Telephone  Service. 
Assumptions  as  to   foreign  and  Bell  exchange  rates — 

Statistics  cited   inconclusive,  even  if  they  were  correct 31 

Statistics  incorrect 

Errors  of  fact 31 

Errors  of  method : 

Letter  rates  no  criterion,  being  an  index  neither  to  cost,  nor  to  value  of 

telephone  message  31 

Letter  rates  alone  vary  widely  among  foreign  countries 31 

Mr.  Lewis'  own  statistics  show  that  rates  are   lower  where  private   companies 

operate    31 

Table  giving  annual   tarilTs,  flat-rate  service,  for  leading  cities  of  different  coun- 
tries, misleading  and  incorrect — 

It  is  a  comparison  of  rates  in  exchanges  having  exclusively  unlimited  serv- 
ice with  those  having  chiefly  or  exclusively  message  service 32 

Rates  compared  are  maximum  rates,  whereas  in  most  fiat  rate  cities  not 
more  than  10%  of  subscribers  pay  maximum  rates,  and  in  message  rate 
exchanges,   not  more  than  1%  (excluding  private  branch  exchanges)  pay 

the  maximum  quoted  charge   32 

Comparison  of  minimum  rates   more   significant:   shows   decidedly   different 

results    ' 32 

Chicago  rate  misquoted  and  misapplied    32 

List  of  cities  selected  at  random,  without  regard  to  such  important  factors 

as  size,  population  or  number  of  telephones 33 

Using  cities  selected  by  Mr.  Lewis,  and  comparing  rates  in  foreign  ex- 
changes   having   unlimited  service  exclusively  with  corresponding  cities 

in  the  United   States,  shows  foreign  rates  are  higher 33 

Table  giving  statistics  of  rates  in  message  rate  exchanges  erroneous  and  mislead- 
ing- 
Four  of  eight  foreign  cities  should  be  excluded,  rates  given  not  being  message 

rates 33 

Where  both  flat  and  message  rates  are  given,  Mr.  Lewis  uses  whichever  is  cheaper, 

in  computing  his  statistics  for  foreign  cities 34 

F.xclianges  compared  vary  widely  as  to  number  of  telephones 34 

Berlin  rates  omit  special  charges  for  night  service 34 

Comparison  relates  only  to  rates  for  individual  line  business  service,  whereas 
other  classes  of  service  are  more  important,  and  are  cheaper  in  Bell  ex- 
changes than  abroad  34 

A  general  comparison  of  foreign  and  .^mcrican  exchange  rates — 

Business  and  residence  rate  considerations  34 

Character  of  telephone  development  abroad — exploitation  of  large  and  profit- 
able communities  at  the  expense  of  the  smaller  and  less  profitable 35 

Statistics  of  average  exchange  revenue  per  telephone 36 


Page 

Quality  of  service  rendered — hours  of  service   36 

Real   average  exchange  revenues  per  station  in  terms  of  American  dollars..  i8 

Other  considerations    (Switzerland,  Australia  and  New  Zealand) 38 

Comparison  of  rates  in  competitive  and  non-conipctilive  exchanges — • 

Table   giving  rates  "before  and    after    competition"    '^furnished    by    a    rival 

company)   perverted    40 

Decreases,  instead  of  increases,  after  elimination  of  competition 40 

Many  decreases  made  after  introduction  of  competition  only  part  of  general 
downward    revisions    for  exchanges,    competitive    and    non-competitive 

alike   40 

True  statistics  as  to  iJcll  rales  after  cessation  of  competition 40 

Statistics  showing  misleading  tendency  of  comparing  by  population  instead 

of  by  number  of  telephones 41 

Table  of  comparison,  taking  into  account  both  maximum  and  minimum  rales  42 

Table  of  comparison  on  the  minimum  rate  basis  alone 42 

Assumptions  as  to  toll  rates — 

Duplication   in   counting 43 

Improper    use    of    the    word   "tuli"    43 

Errors  of  fact    44 

Errors  of  method : 

Failure  to  take  into  account  the  shorter  distances  (which  are  the  more 

important)    44 

Failure    to    take    into    account    important    ditterences    in    applying    unit 

charges    45 

Distinction    between    "two-nunibcr"     and     "particular     person"     ser\icc 

ignored    45 

Distinction  belneen   "ordinary"  and  "urgeni"  service  ignored 46 

International  service  ignored  in  quoting  foreign  toll  rates 46 

Differences  in  cost  of  construction  and  operating  wages  ignored 47 

Differences  in  cost  due  to  differences  in  character  of  service  ignored...  47 

Deficits  from  operation  of  toll  service  ignored 49 

C.     As  to  Social  Inefficiency  or  Inadequacy  of  Private  Telephone  Systems. 
Statistics  purporting  to  show  number  of  foreign  toll  messages — 

German  statistics  in  error  as  to  fact    50 

Fallacy  of  considering  toll   conversations   without   taking   into   account   the   ex- 
change development   50 

Toll  messages  per  capita,  more  accurate  basis  of  comparison,  show  results  decid- 
edly in  favor  of  private  operation 51 

Statistics  as  to  total  telephone    traffic  per  capita   52 

Statistics  as  to  total  number  of  telephones  in  service,  and  per  100  population..     52 
Statistics   as    to   comparative   telephone   development   in   principal    cities   in    the 

United  States  and  in  foreign  countries 53 

Statistics  showing  telephone  development  in  cities  of  more  than  300,000  popula- 
tion in  the  United  States  and  in  Northwestern  Europe,  arranged  in  order  of 

development    54 

Summary  as  to  Telephones 55 

CONCLUSION  55 

APPENDICES 

Appendix  .\ — Information    Concerning    the    Adequacy    of   Compensation    for    Railway    Mail 

Transportation  in  the  United  States    ■ 57 

Appendix  B — The  Elimination  of  Certain  Telegraph  Operations  Under  Postalization 61 

Appendix  C — Letter  Concerning  the  Amalgamation  of  Post  Office  and  Telegraph  Organiza- 
tions in  Europe 72 

Appendix  D — Telegraph  and  Telephone  Deficits  Under  Government  Operation 74 

Appendix  E — Relative  Value  of  Money  in  Foreign  Countries  and  in  the  United  States  as  Re- 
flected in  the  Wages  of  Telephone  Operators.    Comparison  of  the  Wages  of 

Ordinary  Day  Switchboard  Operators    78 

Appendix  F — History  of  Telegraph  Rates 79 

Appendix  G — Comparison  of  Ordinary  and  Urgent  13omestic  Toll  Rates  in  Foreign  Countries 

with  Those  in  the  United  States  83 

Appendix  II — List  of  References  and  Authorities  85 


ANALYSIS 

(The  small  reference  figures  shown  throughout  this  paper  refer  to  a  numbered  list  of  sources  and  authorities  given 

in    Appendix    H.) 


Mr.  Lewis'  premises  are: — 

1.  Telegraphs  and  telephones  are  not  competitive,  their  prices  do  not  tend  to  fluctuate,  and 
they  have  the  price  characteristics  of  monopolies. 

2.  Without  competition,  the  rule  of  private  financiering  under  monopolies  obtains — the  higher 
the  price  secured,  the  higlier  the  profit. 

3.  This  being  true,  the  motive  of  private  monopoly  is  restricted  to  rendering  only  that  degree 
of  social  service  consistent  with  maintaining  such  prices. 

4.  Accordingly,  the  private  conduct  of  a  monopoly  is  not  productive  of  its  highest  utilization 
or  greatest  social  service. 

No  attempt  is  made  herein  to  discuss  these  questions  of  economic  theory.  However,  it  may  be 
noted  that : 

1.  Mr.  Lewis  bases  his  contention,  that  telegraphs  and  telephones  have  the  price  characteris- 
tics of  monopolies,  upon  Professor  H.  C.  Adams'  dictum  that  industries  of  "decreasing  returns"  have 
the  price  characteristics  of  monopolies,  whereas  Professor  Adams,  himself,  has  doubted  that  telegraphs 
and  telephones  are  industries  of  "decreasing  returns",  as  have  other  pruniinent  economists. 

2.  Since  Professor  Adams  expressed  his  views  on  "private  financiering"  and  prices,  the  Inter- 
state Commerce  Commission  and  state  regulating  commissions  have  been  created  to  counteract  the 
tendency  Professor  Adams  pointed  out. 

3.  There  is  thus  set  up  a  controlling  check  upon  any  motive  that  might  induce  private  monop- 
oly to  render  "only  that  degree  of  social  service  consistent  with  maintaining  such  prices." 

4.  In  this  way  is  corrected  any  tendency  of  private  monopoly  to  conduct  its  service  on  a  basis 
"not  productive  of  its  highest  utilization  or  greatest  social  service." 

Without  further  discussion  of  the  merits  of  tliese  general  statements,  it  is  proposed  to  accept  the 
test  suggested  by  Mr.  Lewis,  and  to  "enter  into  a  minute  analysis  of  the  facts  which  govern  approach 
to  business-like  conclusions  on  this  subject." 

I.      TELEGRAPHS 

Mr.  Lewis  condemns  privately  owned  telegraph  systems  as  compared  with  government  owned 
telegraph  systems  on  the  following  assunii)tions :  (.'\)  that  ])rivatc  operation  of  telegraphs  is  rela- 
tively inefficient;  (Pi)  that  the  ])rices  of  private  telegraph  service  are  relatively  high;  and  (C)  that  the 
"social  efficiency,"  adequacy,  or  development  of  private  telegraph  service  is  relatively  low. 


A.  AS  TO  THE  RELATIVE  INEmCIENCY  OF  PRIVATE  TELEGRAPH  OPERATION. 

In  general,  Mr.  Lewis'  discussion  of  the  assumed  inefficiency  of  private  telegraph  operation  con- 
sists of  a  development  of  the  following  main  points:  the  United  States  Post  Office  is  not  inefficient; 
the  private  telegraph  institutions  are  actually  inefficient  as  indicated  by  comparative  statistics ;  and  the 
private  telegraph  organizations  must  be  relatively  inefficient  because  the  advantages  of  economy  of  postal 
organization  and  methods  are  not  obtainable  under  private  management.  These  assumptions  are  dis- 
cussed below  in  the  order  named. 


The  United  States  Post  Office  Is  Not  Inefficient. 

Mr.  Lewis  assumes  that  the  United  States  Post  Office  requires  defense  as  to  its  efficiency  in 
any  discussion  of  government  ownership,  and,  therefore,  attempts  to  prove  that  it  is  efficient  by  an 
explanation  of  postal  deficits,  and  by  statistics  of  units  of  work  perfonned  per  postal  employee  in  the 
United  States  and  in  other  countries.  No  attempt  is  made  herein  to  prove  that  the  United  States  Post 
Office  is  inefficient ;  but  it  will  be  clearly  shown  below  that  the  data  adduced  by  Mr.  Lewis  does  not 
establish  the  defense  which  he  thought  necessary. 

Mr.  Lewis'  defense  of  the  United  States  Post  Office  deficits  is: 

1.  Of  the  Post  Office  business,  29.24%  produces  only  5.19%  of  the  revenue;  and  L85% 
of  the  business  is  franked.  If  all  this  business  had  paid  first-class  rates,  the  Post  Office  would 
have  shown  a  surplus  at  all  times  since  the  Civil  war,  and  a  surplus  of  $60,000,000  in  1912. 

2.  Deficits  in  the  postal  service  are  justified,  as  not  contrary  to  the  public  interest. 

With  reference  to  the  last  contention,  it  may  be  observed  that  the  fact  of  a  deficit  or  surplus 
in  the  postal  service  is  in  itself  proof  neither  of  efficiency  nor  of  inefficiency,  since  a  surplus, 
according  to  Mr.  Lewis'  general  argument,  is  possible  with  high  prices  and  low  efficiency;  or  a 
deficit  is  to  be  expected  with  improperly  low  prices  and  high  efficiency.  Indeed,  deficits  in  the 
Post  Office  service  may  be  justified ;  but  it  should  be  noted  in  this  connection  that  a  justification 
of  deficits  in  the  postal  service  does  not  apply  to  telephone  or  telegraph  service,  since  in  all  coun- 
tries the  use  of  the  latter  services  is  restricted  by  the  necessities  of  cost,  whereas  the  postal 
service  is  universally  used.  As  Mr.  Lewis  takes  exception  to  the  point  of  view  that  telephones 
and  telegraphs  are  essentially  of  a  more  restricted  character  than  the  postal  services,  the  follow- 
ing official  expression  of  the  opinion  of  the  Australian  postal  administration  is  pertinent : — 

"The  telephone  service  affects  a  limited  number  of  the  population,  and,  more  so  than  any  other  branch 
of  the  Department's  business,  may  be  said  to  partake  of  the  nature  of  a  commercial  enterprise,  so  that  its 
revenue  should  be  sufficient  to  cover  working  expenses,  including  provision  for  depreciation,  while  returning 
a  fair  percentage  on  the  capital  invested.    *    *     *    "" 

However,  since  Mr.  Lewis  has  attempted,  despite  the  official  reports  of  the  postal  service, 
to  show  that  the  Post  Office  in  fact  does  produce  a  very  considerable  profit,  it  may  be  significant 
to  show  that  his  assertions  are  not  warranted,  for  the  following  reasons: 

a.  Franked  and  second-class  matter  would  not  move  at  first-class  rates ;  and  it  is  mani- 
festly improper  to  assume  that  it  would,  in  the  calculation  of  financial  results."* 

b.  Although  Mr.  Lewis  has  constructed  some  fictitious  revenues  not  included  in  the 
official  accounts,  he  has  failed  to  include  several  items  of  actual  expense  not  included  in  the 
Post  Office  accounts. 

c.  It  is  believed  that  the  government  does  not  assume  all  the  expense  properly  in- 
curred in  the  Postal  service,  because  of  inadequate  compensation  for  mail  transportation. 

The  first  reason  is  believed  to  be  obvious  and  to  require  no  discussion.  The  facts  as 
to  the  incomplete  official  statements  of  Post  Office  expense,  and  as  to  compensation  for  the 
transportation  of  mails  which  are  less  obvious,  are  considered  briefly  below : 


3 
INCOMPLETE  STATEMENTS  OF  POST  OFFICE  EXPENSE. 

The  expenses  officially  classified  as  Post  Office  expenses  do  not  include  large  sums  which 
are  actually  spent  for  Post  Office  business,  classified  under  Post  Office  Department,  Treas- 
ury Department,  and  the  Department  of  Justice  as  parts  of  the  Civil  Establishment ;  and 
the  official  expense  account  of  the  Post  Office  does  not  include  the  charges  on  public  build- 
ings, which  are  under  the  jurisdiction  of  the  Treasury  Department,  used  wholly  or  partly 
for  Post  Office  purposes.  It  is  not  possible  to  determine,  from  public  reports  at  least,  to 
what  extent  the  Post  Office  profits,  in  statements  of  its  financial  results,  from  the  omission 
of  these  expenses;  but  that  their  total  is  large  is  indicated  by  the  following: 

The  amount  spent  for  the  Post  Office  Department,  as  a  part  of  the  Civil  Establish- 
iiietit,  exclusive  of  "Deficiency  in  the  Postal  Revenues,"  for  the  fiscal  year  1912  was 
$1,893,037.'  This  probably  includes  only  expenses  classified  under  the  heading  "Post  Office 
Department''  in  the  Civil  Establishment  appropriations;  i.  e.,  does  not  include  expenses  of 
office  of  Auditor  for  t!ie  Post  Office,  etc.  However,  an  examination  of  the  Appropriation 
Act  of  March  4tli,  1913,  indicates  that  the  following  appropriations  of  this  character  were 
made  for  the  .fiscal  year  July  1st,  1913,  to  June  30th,  1914:-— 

POST  OFFICE  DEPARTMENT: 

Salaries,  wages,  etc.,  offices  of  Postmaster  General,  Assistant  Postmasters  General,  and 
subsidiary  general  offices,  including  office  of  Assistant  Attorney  General  for  the  Post 
Office    $1,750,500 

Contingencies   162,850 

Total  $1,913,350 

TREASURY  DEPARTMENT: 

Office  of  Auditor  for  the  Post  Office: 

Salaries    $462,660 

Piece  Rates  166,960 

Postal  Savings  System 49,300 

Contingencies  87,700 

$766,620        766,620 
Office  of  the  Treasurer: 

Postal  Savings  System 18,000 

DEPARTMENT  OF  JUSTICE: 

Salary  of  Assistant  Attorney   General   for  Post  Office   5,000 

Total  Appropriations  of  Civil-  Establishment  for  Post  Office  Purposes  $2,702,970 

The  above  does  not  include  an  appropriation  for  the  Supervising  Architect's  Office, 
Treasury  Dei)artment,  of  $235,920.  This  covers  the  design  of  public  buildings,  purchase  of 
sites,  and  supervision  of  public  buildings  and  general  maintenance  thereof,  largely  for  Post 
Office  purposes. 

All  of  the  preceding  appropriations  are  classified  as  appropriations  for  the  general 
civil  establisiiment.  Appropriations  for  the  Post  Office  Department,  as  an  institution,  are  made 
by  separate  act.' 

In  addition  to  the  expenses  described  above,  there  is  a  very  heavy  expense,  not  in- 
cluded in  Post  Office  reports,  in  the  nature  of  rent  for  the  Post  Office  use  of  public  build- 
ings. It  is  not  possible  from  the  official  reports  to  determine,  even  within  approximate  limits, 
how  great  this  expense  for  Post  Office  purposes  is,  but  the  following  will  indicate  that  it  is 
a  large  item : 

On  June  30tii,  1912,  tlie  cost  of  public  buildings  used  for  Post  Office  purposes  was:* 

POST  OFFICES   (only)  : 

Construction  $38,585,869.04 

Extensions   and   Alterations 2,034,217.19 

Cost  of  Sites 18,371,652.19 

Total  $58,991,738.42 

POST  OFFICES,  COURT  HOUSES,  CUSTOM  HOUSES,  ETC.  (i.  e..  Joint  Post 
Office  Buildings)  : 

Construction   $97,611,421.66 

Extensions  and  Alterations 10,542.784.38 

Cost  of  Sites 18.926,343.64 

Total   $127,080,549.68 


4 

The  above  does  not  include  in  the  total  an  item  reported  as  "Annual  Repairs  and 
Maintenance."  which,  although  it  is  shown  as  a  cumulative  total  and  includes  mechanical 
equipment  and  vaults,  is  probably  current  expenses  to  a  large  extent.  The  total  of  this  "An- 
nual Repairs  and  -Maintenance"  exi)ense  for  the  fiscal  year  1912  was.  for  buildings  used  for 
post  offices  only,  slightly  more  than  $230.CHJO;  and  for  buildings  used  as  post  offices,  court 
houses,  custom  iiouses,  etc.,  jointly,  $674,000,  approximately.  There  was  also  spent,  under 
the  heading  "General  Expenses  for  Public  Buildings,"  §583.800,  approximately,  for  post 
offices  only:  and  $184,400,  approximately,  for  joint  post  office,  court  iiouse,  etc.,  buildings 
The  exi)enditures  for  "furniture  and  repairs  for  same"  for  post  offices  only  was  about 
$374,800,  and   for  joint   post  offices,  custom  houses,  etc.,  $417,300,  approximately.^ 

The  items  of  expense  for  public  buildings  given  above  are  shown  in  detail,  by  public 
buildings,  in  the  official  reports.  There  are  some  others,  not  given  in  detail,  which  cannot 
be  allocated  to  specific  classes  of  public  buildings ;  but  it  is  apparent  that  they  are  very  largely 
incurred  on  account  of  the  Post  Office.  The  more  important  of  these  items  for  the  fiscal 
year  1912  were  as  follows:" 

Salaries — Office  of  Supervising  Architect $75.61').9S 

For  General  Inspector  of  Supplies 4.375.10 

For  Kent  of  Buildings 87,666.65 

For  Fuel,  Lights,  and  Water 1,295.207.47 

For  Electrical   Protection  to  Vaults 24.490.00 

For  Pay  of  Assistant  Custodians  and  Janitors    2,125,828.06 

$3.61,1187.23 
The  total  expenditure  for  public  buildings  from  July  1,  1911,  to  Jui--:  30.  1912,  was.  $22,660,212.85' 

COMPENSATION  FOR  MAIL  TRANSPORTATION. 

The  compensation  to  railroads  for  transportation  of  mails  is  believed  to  be  inadequate 
for  the  following  reasons : 

Compensation  to  railroads  has  increased  in  very  much  smaller  proportion  than  other 
Post  Office  expenses  in  recent  years.     (See  Appendix  A.) 

Compensation  to  railroads  for  handling  business  of  the  express  companies  is  greater 
for  similar  business  than  for  handling  mails.     (See  .Appendix  A.) 

The  almost  universal  complaints  of  railroad  managers  addressed  to  the  j^ublic  have 
caused  Congress  and  tlie  Post  Office  Department  to  institute  an  investigation  in  the  matter.' 

Compensation  for  transporting  mails  by  rail  is  less,  proportionately,  in  the  United 
States  than  in  Great  Britain,  as  shown  by  the  following  statistics : 

PAYME.NT  ON  ACCOUNT  OF  STEAM  RAILROAD  MAIL  SERVICE 

U.   S.  rOST  OFFICE,  YEAR  ENDING   JUNE  30,    1913. 

Mail    Transportation' $47,393,266 

Railway   Post  Office  Car  Service' 4,566,212 

Total    $51,959,478 

Per  Cent,  of  Total  Reported   (by  Postmaster   General)    Expense 19.8 

PAYMENTS  OX  ACCOUNT  OF  STEAM  RAILROAD  ^lAIL  SERVICE 

BRITISH    I-OST   OFFICE,  VEAR   ENDING    MARCH    31,    1913. 

Conveyance  of  Mails   (rot  including  Parcels  Post)*'   $9,324,408 

Railway   Share   of   Rail-borne    Parcels   (557^)" 5,635,217 

Total    $14,959,625 

Total  Expensest  $62,4.W.777 

Per  Cent,  of  Total  Expenses 23.9 

It  should  be  noted  that  parcel  post  payments  for  railway  transportation  amount  to 
about  38%  of  the  total  mail  (inland)  transportation  expense  in  Great  Britain;  whereas  in 
the  United  States,  up  to  the  present,  additional  compensation  to  the  railways  on  account  of 
parcels  post  business  cannot  exceed  5%  increase  over  the  contract  payments  based  on  con- 
ditions applying  to  the  transportation  of  ordinary  mail." 

♦This  item  is  officially  described  as  "conveyance"  of  mails.  It  covers  mail  transportation  on  rail- 
roads, not  including  steamship  service,  but  an  examination  of  the  reports  either  of  the  Postmaster  General 
or  of  the  Board  of  Trade  as  to  railway  revenues  does  not  determine  whether  or  not  other  mail  convey- 
ance is  included. 

fThis  total  does  not  cover  telephones  and  telegraphs.  It  includes  about  $1,300,000'  for  the  purchase 
of  sites  and  the  erection  of  buildings — an  item  not  included  as  Post  Office  expense  in  the  United  States. 
If  this  amount  be  deducted  from  the  total  given  above,  the  percentage  of  railway  payments  to  total  pay- 
ments is  24.4. 


MR.  LEWIS'  DEFENSE  OF  THE  EFFICIENCY  OF  THE  UNITED  STATES  POSTAL 
PERSONNEL. 

Mr.  Lewis  quotes  the  following  statistics  to  show  that  the  efficiency  of  the  postal  per- 
sonnel in  the  United  States  is  increasing,  with  the  result  that  the  cost  of  service  per  unit  is 
decreasing;  and  to  show  that  the  efficiency  of  the  United  States  postal  personnel  is  high  as 
compared  with  that  of  other  countries: 


MK.  LEWIS'  TABLE  NO.  L* 

TNITED  STATES 


MR.  LEWIS'  TABLE  NO.  2.* 


XumWei 
of  em- 
ployees. 


KHtlmatcd 

Nutuli.T 

Cost  ptr     ' 

numhvr  of 

of  mall 

a\eraKe     1 

pU-M'cs  mailed. 

[ileces  per 

mall  piece. 

including 

employee 

In  cents. 

foreign  matter. 

per  annum. 

1886.. 

122,698 

1887.. 

127,288 

1888.. 

134,112 

1889.. 

129,295 

1890.. 

153,857 

1891.. 

162,855 

\m2.. 

171,780 

W)i.. 

178,018 

1894. . 

183,916 

1895.. 

189,671 

1896. . 

194,533 

1897.. 

199,846 

1898. . 

208,873 

1899.. 

215,904 

1900.. 

224,029 

1901.. 

235,327 

1902. . 

246,524 

190.3.. 

256,673 

I'XM.. 

2ra,685 

\<m. . 

272,0.34 

vm.. 

278,658 

l')07.. 

278,010 

l'X)8.. 

283.481 

I'm. . 

288,036 

vno.. 

291,320 

!9I1.. 

291,113 

1''12.. 

290,701 

3.474,000,000 

3.495,100,000 

3,576,100,000 

3.860,200,000 

4,005,408,206 

4.369.900.352 

4.776,575,076 

5.021,841.056 

4.919,090,000 

5.134.281,200 

5,693,719,192 

5,781,002,143 

6,214,447,000 

6,576,310.0(XJ 

7.l2')!l'X).202 

7.424.390.329 

8.085,446.858 

8,887,467.04.s 

9..S()2.4.S'»,53S 

10,187.505.889 

11.361,0' 10,610 

12,255,666,307 

13,173,.340.32<^ 

14,004.577.271 

14.S50.102.S59 

16.'i(K).5.^2.1,3,S 

17.5H,S.05K.'M1 


Oost  per 
average 

timll  piece, 
in  ccnis, 
exclud- 

InK  as-^tiKti 
abto  com 
of  Rural 
Delivery 
Service. 


28,313 

1.44 

27,458 

1.49 

26,665 

1.55 

29,855 

1.58 

26,033 

1.61 

26,833 

1,63 

27,806 

1.57 

28,209 

1.57 

26,746 

1.67 

27,069 

1.64 

2'),268 

154 

28,927 

1.57 

29,752 

1.50 

30,459 

1.47 

31,826 

1.44 

31,549 

1.48 

32,797 

1.47 

34,625 

1.49 

35.3(^5 

1.53 

37,449 

1.56 

40,770 

1.49 

44,083 

1.48 

46,469 

1.50 

48,620 

1.49 

50.975 

1.47 

58,054 

1.33 

60.504 

1..34 

1.57 
1.50 
1.47 
1.43 
1.46 
1.42 
1.40 
1.40 
1.36 
1.28 
1.26 
125 
1.25 
1.22 
1,12 
1.10 


Xumbt'r  of  f^stal-scrvice  units  yi'r  postal  employee. 


Country 

Belgium     

United  States 

Netherlands   

Italy   

Luxemburg  

Denmark  

Switzerland 

Germany   

Sweden    

France  

Norway  

Austria 

New  Zealand  

Great   Britain    

Hungary    

Japan    


Units. 

Rank 

85,819 

1 

60,651 

2 

53,621 

3 

42,947 

4 

40.321 

5 

38,930 

6 

37,562 

7 

37,236 

8 

35,837 

9 

33,697 

10 

32,414 

11 

30.528 

12 

28,6% 

13 

26,056 

14 

23.025 

15 

21.820 

16 

It  appears  from  these  statistics  that  the  United  States  ranks  second  in  postal  efficiency. 
\Vc  have  no  means  of  checking  these  statistics  completely.  We  dispute  their  accuracy, 
however,  and  maintain  that  they  are  not  significant  for  the  following  reasons : 

1.  Mr.  Lewis'  statistics  as  to  the  number  of  postal  employees  in  the  United  States 
do  not  agree  with  official  statistics.  The  I'ostmaster  General,  in  his  report  dated  December 
1,  1909,  stated  (page  1)  that  there  were  then  about  325,000  employees  in  the  service,  or  about 
35,000  more  than  shown  by  Mr.  Lewis  for  1912.  This  error  would  make  a  dilYerence  of 
about  6,000  pieces  of  mail  per  employee  per  annum. 

2.  Accurate  statistics  of  employees  engaged  in  the  postal  service  cannot  be  obtained 
fur  most  foreign  countries.  We  are  advised  by  the  Post  Office  Department,  Great  Britain, 
that:  "The  staff  is  common  to  the  postal,  telegraph,  and  telephone  service  and  no  separate 
figures  can  be  given.""  Again,  even  in  the  case  of  Luxemburg,  which  is  very  small,  it 
is  f>fficially  stated  that  "the  number  of  empl  >yces  in  each  ser\ice  cannot  be  siiown  separately."'" 
Mr.  Lewis  himself  in  his  speech  of  January  16,  1914,  has  admitted  that  this  condition  exists. 
He  says: 


•Tables   taken    from    Mr.    Lewis'   speech  arc  numbered  in  the  order  in  which  they  are  here  analyzed 
to   facilitate  reference. 


"*    *    •    If  the  gentleman   refers  to  the  tclcgr.nph,    I    wish    to   suggest   that   its   personnel   is   not 
separated  from  the  postal  personnel   (i.  e.,  in  England")  :  their  efforts  arc  devoted  to  both  services." 
(Mr.    Madden):    "I    understood    the   gentleman  was  talking  about  telephone  service." 
(Mr.    Lewis)  :   "And   the   telephone   service  cannot  be  fully  segregated  cither."* 

3.  The  postal  employee  cannot  serve  as  a  unit  in  determining  the  efficiency  of  the 
postal  personnel.  It  would  be  necessary  to  equate  all  employees  to  a  "standard"  employee 
for  each  of  the  countries  used  by  Mr.  Lewis.  It  is  doubtful  whether  efficiency  statistics 
even  on  this  basis  would  be  of  any  significance.  As  an  instance  of  the  inaccuracy  of  Mr. 
Lewis'  statistics  in  this  respect,  it  may  be  noted  that,  in  Great  Britain,  of  the  total  em- 
ployees of  the  Postal  Establishment  (240,134),  122,018,  or  more  than  half,  are  known  as 
"unestablished  officers"-" ;  i.  e.,  their  employment  is  largely  auxiliary,  temporary,  or  inter- 
mittent."* Of  course,  the  inclusion  of  such  employees  in  Mr.  Lewis'  statistics  would  greatly 
decrease  the  apparent  efficiency  of  the  British  personnel. 

4.  The  above  relates  to  the  Tables  Xos.  1  and  2  as  "comparisons  of  our  postal  ac- 
complishments with  that  of  other  nations."  As  a  matter  of  fact,  Mr.  Lewis  has  not  actually 
attempted  to  show  the  purely  postal  efficiency  in  the  various  foreign  countries ;  for  he  states, 
in  connection  with   some  of  these  statistics,  as  quoted  with  reference  to  tcleplionc  efficiency  :"' 

"The  column  for  postal  efficiency  is  inserted  to  show  the  performance  of  the  postal  personnel. 
For  this  purpose  the  postal  service  unit  is  treated  as  the  average  mail  piece,  and  the  telegram  as  equal  in 
service  to  ten  mail  pieces,  while  the  local  call  is  rated  as  equal  to  one-half  mail  piece,  or  unit,  and  the  intcrur- 
ban  as  equal  to  two  mail  pieces." 

Hence,  Mr.  Lewis'  comparison  of  postal  efficiency  is  of  no  significance,  except  on  the 
assumption   that   his   equation  of  telegraph  and  telephone  traffic  in  terms  of  the  postal  imit 
is   correct.      \ot   only    is    such   an   equation  impossible  as  to  any  given  country,  but  it  -can- 
not be  assumed  that  the  average  mail  piece  in  any  country  is  equal,  even  roughly,  to  the 
average  mail  piece  in  any  other  country,  owing  to  wide  differences  in  the  average  length  of 
mail  haul,  in  the  conditions  as  to  urban  and    rural    delivery,    in   the    proportions   of    foreign 
mail   (each  piece  of  which  would  be  counted  in  each  country  in  which  it  is  handled,  although 
only  a  part  of  the  operations  connected  with  receipt  and  delhery  of  such  mail  matter  is  per- 
formed in  one  country),  etc. 
From  the  above  discussion  it  will  be  apparent  that  Mr.  Lewis  has  not  demonstrated  the  efficiency 
of  the  United  States  Post  Office,  because  he  has  not  proved  that  the  Post  Office  returns  a  profit  even 
if  this  were  significant ;  because  his  statistics  of  postal  employees  are  in  error  as  to  the  United  States 
and  as  to  other  countries ;  and  because  his  statistics  of  postal  performance  rest  upon  gratuitous  as- 
sumptions as  to  units  of  postal  work.    Much  of  this  discussion  is  not  significant  as  to  the  general  sub- 
ject of  this  paper,  but  has  been  necessary  because  Mr.  Lewis  has  reached  his  conclusion  as  to  the 
superior  efficiency  of  public  over  private  operation  by  contrasting  the  assumed  high  postal  efficiency 
in    the    L'nited    States    with    the    assumed    low    efficiency    of    the    telegraph     and    telephone    or- 
ganizations  in  the   United    States,  as  compared  with  that  in  foreign  countries.    If  both  these  assump- 
tions were  justified  by  the  facts,  then  admittedly  a  strong  presumption  in  favor  of  government  owner- 
ship, so  far  as  "institutional  efficiency"  is  involved,  would  be  established.     The  first  of  these  assump- 
tions, however,  has  at  least  not  been  substantiated  by  any  evidence;  it  will  be  proven  in  the  following 
pages  that  the  second  is  untenable. 

Mr.  Lewis'  Statistical  Proof  of  the  Inefficiency  of  Private  Telegraph  Organizations. 

Mr.   Lewis  submits  the  following  statistics  to  prove  the  relative  inefficiency  of  ])rivate  telegraph 
organizations  in  the  United  States: 

MR.  LEWIS'  TABLE  N'O.  3. 


Traffic  dcnsily  and  efficiency 

Country. 

1  elcgrams  pet 

employee. 

Telegrams  per  operative  office. 

Per  annum. 

Per  day. 

Per  annum. 

Per  day. 

New  Zealand    

United  States  

3.700 
3.4«7 
3.115 
3.063 
2,370 
1.607 
1,596 

10.1 
9.5 
8.7 
4.4 
8.6 
6.6 
4.4 

4,380 
14,332 
2,097 
5.451 
1,405 
4,774 
2,454 

12 
39.3 

6 
IS 

4 
13 

7 

Belgium    

Sweden              

Switzerland   

7 

That  this  comparison  is  unsound  and  does  not  substantiate  Mr.  Lewis'  conclusions  as  to  the 
efficiency  of  telegraph  personnel  will  be  apparent  from  the  following: 

1.  The  table  is  based  on  data  which  does  not  include  all  telegraph  employees  in  foreign 
countries.  Both  in  the  United  States  and  in  otlier  countries  many  postal,  telegraph,  and  tele- 
phone employees  are  engaged  in  the  work  of  more  than  one  service,  including,  in  many  instances, 
railroad  service.  As  stated  above,  no  definite  classification  of  employees  in  the  postal  services  of 
foreign  countries  exists.  Even  in  the  official  annual  reports  no  attempt  is  made  to  allocate 
"joint"  employees,  i.  e.,  such  employees  as  are  not  engaged  exclusively  in  telegraph  duties. 

For  instance,  the  annual  reports  of  the  Telegraph  Administration  of  Belgium  do  not  dis- 
tinguish between  the  number  of  telegraph  employees  and  the  number  of  telephone  employees; 
their  reports  do  show,  however,  that  the  number  of  employees  in  the  Railroad,  Postal,  and 
Bridges  and  Highways  Administrations,  who  have  telegraph  or  telephone  duties  in  addition  to 
other  duties,  is  greater  than  the  total  number  of  employees  of  the  Telegraph  (including  Tele- 
phone) Administration.-'  Tiiese  employees  have  been  ignored  in  Mr.  Lewis'  statistics.  Telegraph 
messengers,  of  wliich  there  are  about  3,600,  a  very  large  proportion  of  the  total  employees,  also 
do  not  appear  on  the  payroll  of  tlie  Telegraph  Administration."-  -" 

In  the  case  of  Sweden,  a  letter  from  the  Telegraph  Administration,  dated  February  18, 
1913  states  that  an  accurate  distinction  between  telegraph  employees  and  telephone  employees 
"does  not  exist."  The  Administration  states,  however,  that  on  December  31,  1911,  there  were 
at  least  3,422  telegraph  employees.-'  This  is  88%  more  than  the  number  of  telegraph  employees 
quoted  for  the  same  date  in  the  source  (Journal  Telegraphique)  from  which  Mr.  Lewis  derives 
his  data.^' 

In  *he  case  of  The  Netherlands,  Mr.  Lewis  arbitrarily  excludes  2,078  joint  postal-telegraph 
employees  in  calculating  the  telegraph  efficiency.  If  these  joint  employees  had  been  included 
in  the  total  of  telegraph  employees,  the  number  of  telegrams  per  annum  per  employee  in  The 
Netherlands  would  have  been  less  by  about  34%  than  that  shown  by  Mr.  Lewis.^" 

2.  If  the  method  of  comparison  used  by  Mr.  Lewis  were  sound,  there  ought  to  be  no 
great  disparity  between  the  rank  of  the  postal  and  telegraph  efficiencies  of  the  countries  named. 
The  countries  rank,  on  the  basis  of  Mr.  Lewis'  statistics,  as  follows: 

RANK  .'\S  TO  EFFICIEXCY  OF  PERSONNEL. 

Country.  Mail.      Telegraph. 

New  Zealand 7  1 

Belgium    1  4 

Netherlands    3  6 

Norway    6  3 

Sweden   5  5 

Switzcrlanil  4  7 

United  States   2  2 

It  appears  that  New  Zealand  ranks  first  in  one  case  and  last  in  the  other — an  inconsis- 
tency undoubtedly  due  to  errors  in  the  classificalioi>  of  joint  employees. 

3.  If  the  efficiency  of  telegraph  organizations  in  the  United  States  were  not  exceed- 
ingly high,  it  could  not  rank  .second  even  on  the  basis  of  Mr.  Lewis'  statistics,  since  the  relatively 
very  long  telegraph  lines  in  the  United  States  necessitate  proportionately  larger  number  of  plant 
employees  and  a  greater  amount  of  relay  operating  work.  That  the  length  of  hauls  has  a  material 
bearing  on  the  number  of  employees  re(|uired  to  maintain  the  telegraph  plant,  is,  of  course, 
obvious ;  and  it  may  be  noted  in  passing  that  length  of  lines  is  an  important  factor  to  which 
the  Australian   Administration  reverts  in  explaining  high  telegraph  deficits." 

However,  even  on  the  basis  of  these  statistics,  the  efficiency  of  the  private  telegraph  organi- 
zations appears  very  high;  so  that  Mr.  Lewis  is  obliged  to  insert  the  second  column  in  his  table 
in  an  attempt  to  show  that  the  apparent  high  efficiency  of  the  American  telegraph  organizations 
is  due  to  the  lack  of  a  sufiicicnt  number  of  telegraph  offices  in  the  United  States. 

4.  Despite  the  errors  of  fact  concerning  the  efficiency  of  foreign  telegraph  systems — 
errors  which  have  been  most  unfavorable  to  the  private  syst.ems — Mr.  Lewis  find  that  the 
American  systems  are  highly  efficient,  ranking  second  on  his  own  statistics :  and  probal)ly  ranking 
first,  if  the  long  lines  in  the  I'nited  States  are  taken  into  consideration.  It  is,  therefore,  evident 
that  Mr.  Lewis'  case  as  to  the  efficiency  of  the  private  systems  entirely  fails,  unless  he  accounts 


8 

for  these  facts  in  some  way  that  discounts  the  sig^nificance  of  his  own  statistics.  Tliis  he  has 
recognized;  and  has,  in  consequence,  prepared  the  statistics  of  telegrams  per  operative  office 
in  Table  3.  If  these  statistics  are  correct,  they  at  most  lend  some  slight  support  to  the  conten- 
tion that  the  efficiency  of  the  private  organizations  may  not  be  high;  if  they  are  incorrect,  the 
conclusion  is  inevitable  that  Mr.  Lewis  has  himself,  in  effect,  admitted  the  high  efficiency  of 
the  .\merican  telegraph  organizations. 

The  statistics  as  to  telegrams  per  office,  if  correct,  serve  Mr.  Lewis'  purpose  admirably; 
for  it  must  be  admitted  that  if  high  operati\e  efficiency  is  secured  by  a  restriction  of  telegraph 
facilities  to  those  points  where  volume  of  business  assures  economical  adjustment  of  forces  to 
traffic,  the  efficiency  so  obtained  is  not  real.  If.  on  the  other  hand,  apparent  liiyh  efficiency  is 
secured  under  conditions  of  small  loads  per  office,  the  facts  serve  to  emphasize  the  efficiency 
of  the  organization.  The  only  question  involved  in  Mr.  Lewis'  statistics  of  telegrams  per  office, 
therefore,  concerns  their  accuracy. 

A  study  of  Mr.  Lewis'  statistics  as  to  telegrams  per  office  shows  that  they  are  in  error 
because,  in  the  case  of  foreign  countries,  all  kinds  of  telegraph  offices  are  included,  whereas,  in 
the  case  of  the  United  States,  all  railroad  and  other  offices  not  directly  operated  by  the  telegraph 
companies  arc  excluded.  For  example,  in  the  case  of  Sweden,  Mr.  Lewis  has  used  statistics 
of  telegraph  offices  which  include  1,729  railroad  (1,246  private  company)  telegraph  offices,  or 
€0%  of  the  total."  Similarly,  for  New  Zealand,  Mr.  Lewis  has  used  the  figure  for  telegraph 
offices  given  in  the  Journal  Telegraphique  (1,963')'*,  but  the  Annual  Report  of  the  New  Zea- 
land Administration  for  the  same  year  (1910)  states:  "Of  these,  300  were  telegraph  offices  and 
1,663  were  telephone  offices.""  Probably  this  means  that  only  300  were  Morse  operated  offices" 
(the  only  kind  used  by  Mr.  Lewis  for  the  United  States).  (See  page  23  for  further  confirma- 
tion.) 

It  will  be  noted  from  these  facts  that  if  railroad  and  telephone  operated  offices  in  foreign 

countries  are  included  as  telegraph  offices,  similar  offices  must  be  included  for  the  United  States 

in  any  such  comparison  if  it  is  to  be  either  fair  or  accurate.     Mr.  Lewis'  error  is  shown  by  the 

following  statistics  as  to  the  Western  Union  Telegraph  Company: — 

Total  number  of   originating  paid  messages  per  annum,  about   90,000,000 

Number  of  tclegrapli  offices  (receiving  written  telegrams)   of  all  kinds,  October  31,   1913  36.491 

Telegrams  per  annum  per  office 2,466 

Telegrams  per  day  per  office 6.75 

From  these  facts  it  will  be  evident  that  tlie  number  of  telegrams  per  office  in  the  United 
States  is  less  than  in  New  Zealand,  Belgium,  The  Netherlands  and  Switzerland,  four  of  the  six 
foreign  countries  named  by  Mr.  Lewis.  Hence,  it  is  clear  that  the  operative  efficiency  of  the 
American  systems  conceded  by  Mr.  Lewis  is  not  to  be  discounted  because  of  a  restriction  of 
facilities ;  and  that  the  facts  serve  rather  to  accentuate  the  high  rank  of  the  American  systems. 

Not  only  is  the  operative  efficiency  of  the  American  telegraph  systems  exceedingly  high 
under  the  adverse  conditions  described  above,  hut  this  is  true  e^'cn  thous^h  the  hours  of  teleqraph 
office  operation  are  much  longer  in  the  United  States  than  in  any  other  country.  This  is  evident 
from  the  following  facts  as  to  the  length  of  hours  of  telegraph  offices  in  the  countries  named  by 
Mr.  Lewis:* 


New  Zealand  (1910)". 

Norway   (1912)"  

Belgium   (1912)"*  

Sweden    (1912)"   

Netherlands   (1912)"  . 
Switzerland   (1912)"  . 


Per  Cent,  of  Total  Telegraph  Offices- 


Open 
Permanently 


0.0',  i 

0.3 

1.0 

1.6 

0.7 

0.3 


Complete  or 
Prolonged 
Dav  Service. 


95% 

10 

26 

43 

16.9 

19.4 


Limited 
Day  Service. 


5% 
89.7 
73.0 
55.4 
82.4 
80.3 


Western  Union  Telegraph  Company  :* 

Open  day  and  night 19.3% 

Open  until  midnight  or  later S.9% 

Open  until  from  10  p.  m.  to  midnight 6.4% 

Total  open  later  than  10  p.  m 31.6% 


*See  also  discussion  with   reference  to  government  telegraph  facilities,  pages  22-25,  following. 


The  term  "Complete  or  Prolonged  Day  Service"  is  not  defined  in  the  Journal  Tele- 
graphique,  from  which  the  above  statistics  for  foreign  countries  are  derived;  but,  in  general, 
"Complete  or  Prolonged  Day  Service"  does  not  extend  beyond  10  o'clock  p.  m.  Most  of  the 
Telegraph  Administrations  do  not  give,  in  their  annual  reports,  statistics  as  to  the  hours  of 
service  of  their  telegraph  offices.  In  the  case  of  Switzerland,  however,  full  information  of 
this  character  is  given,  and  will  serve  to  indicate  the  significance  of  the  comparison  shown  above. 

TELEGR.'XPH  OFFICES— SWITZERLAND,  1912." 

Xumljcr  of  Offices  with  Continuous  Service 6 

Number  of  Offices  Open  until  10  p.  m 17 

Number  of  Offices  Open  until  9  p.  m 359 

Number  of  Offices  Open  from  7  or  8  a.  m.  until   12  m.,  and  from  1  p.  m.  to  8.30  p.  m 84 

Number  of  Offices  Open  from  7  or  8  a.  m.  until  12  m.,  and   from  2  p.  m.  to  6.  p.  m.,  and 

from  8  p.  m.  to  8.30  p.  m 1.908 

Total  2.374 

Mr.  Lewis'  Assumptions  as  to  Economy  in  Telegraph  Operation  Under  Post  Office  Management. 

Mr.  Lewis  considers  the  private  operation  of  tclcgraplis  inefficient  not  only  on  llic  basis  of  tiie 
erroneous  statistics  in  Tables  1,  2,  and  3,  which  have  been  analyzed  above,  but  also  on  the  assumptions 
that  many  detailed  operations  could  be  eliminated  under  government  management  largely  by  the  use 
of  stamps ;  and  that  many  expenses  of  organization,  like  supervision,  engineering,  rents,  etc.,  could  be 
reduced  or  eliminated  by  consolidation  with  the  Post  Office.  Mr.  Lewis'  error  in  respect  to  the  pos- 
sibility of  eliminating  operations  by  the  use  of  stamps  is  analyzed  in  detail  in  Appendix  B.  However, 
it  should  be  noted  that  there  is  no  reason  why  private  stamps  could  not  be  used  by  the  telegraph  com- 
panies if  this  were  a  desirable  practice,  but  the  telegraph  service  would  be  less  satisfactory  with  stamp 
payments  because: 

\.  Charge  accounts,  which  are  a  great  convenience  to  many  business  houses,  would  be  elim- 
inated. 

2.  "Collect"  messages  (not  permitted  by  governments*-)  would  be  obviously  awkward 
with  stamp  payments.  Of  the  business  of  the  Western  Union  Company,  about  8.000,000  messages 
per  annum  are  sent  "collect."" 

3.  Stamps  cannot  be  placed  on  telegrams  sent  by  telephone,  and  a  charge  account  would 
be  necessary  in  such  cases. 

4.  Even  under  government  ownership,  stamps  or  cash  are  equally  acceptable ;  and  frequently 
cash  only  is  accepted  (particularly  at  railroad  stations  in  Germany ).*- 

In  support  of  his  general  assumption  as  to  the  elimination  of  operations  by  the  use  of  stamps, 
Mr.  Lewis  says: 

The   same   phenomenon    of   relativj   rather  than   actual   waste  or   inefficiency  appears   in   tlic   handling  of   the 
parcel  by  the  express  company  when   compared   with  the  Postal  Department. 

LIST  OF  EXPRESS  PROCESSES. 
The   Express   Companv. 

L  Ascertains  the  rale  to  be  paid. 

2.  Makes  out  waybill. 

3.  Copies  waybill  into  record  of  shipments  "forwarded." 

4.  Copies  same  into  record  of  shipments  "received." 

5.  Makes  statement  of  "shipments  sent"  to  auditor. 

6.  Makes  same  of  shipments  "received." 

7.  Auditor  checks  waybills  against  record  of  "sending"  agent. 

8.  Auditor  checks  same  against  record  of  "receiving"  agent. 

9.  In  case  of  "through"  waybills  previous  items  repealed. 

10.  .Auditor  makes  division  of  percentages  going  to  express  company  and  the  r.iilway  or  railways. 

11.  In  case  of  "through"   waybills  auditor  makes  like  division  of  percentages  between  express  companies 
and  railways. 

Affixing  the  postage  stamp  replaces  all  these  processes  in  the  post  office. 

Some  of  the  items  inay  have  been  eliminated  by  the  use  of  stamps ;  but  the  postal  clerk  has  "to 
ascertain  tin.'  rate  to  be  paid  "  to  check  the  postage: ami  it  is  true  that  others  are  necessary  when  parcels 
are  "insured,"  as  all  parcels  are  when  sent  by  express.     Moreover,  postal  clerks,  even  in  the  Christ- 


10 

mas  rush,  have  to  stop  to  open  parcels  to  be  sure  that  the  "classification"  is  not  abused— an  expensive 
operation  not  common  to  express  practice. 

Mr.  Lewis  gives  the  following  table,  in  connection  w  ith  his  arguments  as  to  the  elimination  of 
large  items  of  organization  expense  under  postalization: 


MR.  LEWIS'  TABLE  NO.  4. 


Commercial  telegrafh  systems,  190J.  Compiled  from  sfecial  refort  of  United  States  census,  telefhones  and 

telegraphs,  igoi. 

[Pages   101-102] 


16. 

17. 

18. 


1.  Gross  receipts  from  operation. 

2.  Operating  e.xpenses,  total 

3.  Salaries,  total    


4.  Salaries,  corporation  officers   

5.  Salaries,    general   officers 

6.  Salaries,  all   other  general  office   em- 

ployees     


7.    Wages,  total 


8.  Wages,  managers  and  assistants. 

9.  Wages,  operators  


10.  Wages,   inspectors    

1 1.  Wages,  linemen  

12.  Wages,  messengers   

13.  Wages,  all  other  wage  earners. 


14.  Operation  and  maintenance 

15.  Legal  expenses   

Rentals,  offices  and  other  real  estate.. 
Rentals,    conduits    and    underground 

privileges    

Telegraph    traffic   paid   or   due   other 

companies    

Miscellaneous    


19. 

20.  Net  earnings   from  operation 

21.  Income  from  other  sources,  total.... 

22.  Dividends    on    stock    of    other    com- 

panies     

23.  Lease  of  lines,  wires,  and  conduits... 

24.  Rent   from  real  estate 

25.  Interest    

26.  Miscellaneous    

Z7.  Gross  income,  less  operating  expenses 


Receipts. 


$35,300,569 


8,708,158 
5,629,469 


1,159.658 

4,185,799 

205.070 

6,719 

72,223 

14,337,627 


Expenses. 


Per  cent,  of — 


126.592.411 
1,162.(),L' 


230,250 
255,740 
676,642 


13,877.041 


2,898,588 
8,862,349 

573,369 
573.0S8 
839.360 
130,287 


9,220.948 
194,890 
875.213 

7,808 

724,826 
529,053 


Operating 

expenses. 

($26,592,411) 


1000 
4.4 


0.9 
1.0 

2.5 


52J 


10.9 
33.3 

2.2 
22 
3.2 
0.5 


34,7 
0.7 
i.i 

(') 

2.7 
2.0 


Earnings 
and 
income  from 

all  sources 
($40,930,038) 


65.0 
2.8 


0.6 
0.6 
1.7 


Number 
of  em- 
ployees 
o  f  each 
class. 


829 


33.9 


7.1 
21.7 

1.4 
1.4 
2.1 
0.3 


22.5 
O.S 
2,1 

(') 

1.8 
1.3 


54 

82 

693 


26,798 


5,752 
'10,179 
=2,914 
1,152 
1.208 
4,746 
847 


Average 

annual 

earnings 


$1,402 


4,264 

3.094 

976 


518 


504 
736 
469 
498 
474 
177 
154 


'  Males. 


'  Females. 


'Less  than  one-tenth  of  1  per  cent. 


Mr.  Lewis  states  that  Items  3,  14,  15,  16,  and  19,  amounting  to  26.8%*  of  the  operating  ex- 
penses, might  be  eliminated.  With  minor  exceptions,  it  is  not  apparent  how  any  of  these  expenses 
could  be  eliminated  under  postal  management;  and  Mr.  Lewis  fails  to  indicate  how  this  expense  could 
be  saved.  With  reference  to  Item  14,  "Operatiori  and  Maintenance,"  it  is  impossiI)le  to  make  critical 
comment,  because  the  item  is  not  self-explanatory;  and  the  Census  Report  from  whicli  it  is  taken,  does 
not  define  it.  It  cannot  contain  the  wages  of  operation  or  of  i)lant  maintenance,  as  these  arc  shown 
separately  in  Items  7,  8,  9,  10,  11.  12,  and  13.    It  probably  includes  only  material  and  supply  expense. 

Item  15,  "Legal  Expenses,"  might  be  partly  saved  if  the  government  would  undertake  no  liabil- 
ity for  the  transmission  of  telegrams. 

*This  is  Mr.  Lewis'  statement.    As  a  matter  of  fact,   these  items   amount   to  45. 1    per  cent,  of   the  operating 
expenses. 


11 

Neglecting  Items  14,  15,  and  19,  the  second  of  which  is  relatively  unimportant,  there  remain 
Items  3  and  16,  involving  general  administration  and  supervision,  and  rent.  With  respect  to  general 
administration  and  supervision,  Mr.  Lewis  may  have  in  mind  that  the  general  administration  of  the 
telegraph  system  can  be  handled  by  the  existing  postal  administrative  organization ;  but,  even  if  this 
were  true,  it  would  be  manifestly  absurd  to  state  that  all  of  the  existing  administrative  expense  of  the 
telegraph  systems  could  be  saved.  That  practically  none  of  it  could  be  saved  under  postal  management 
will  be  clear  from  the  following  evidence: 

The  consensus  of  European  opinion  is  that  telepliones  and  telegraplis  cannot  be  consolidated  to 
advantage  with  the  Post  Office  as  to  general  administration;  and  they  are  not  so  consolidated  in  Swe- 
den, and  practically  not  in  Switzerland,  Nor^vay,  and  Denmark.  Count  Hamilton,  of  the  Swedish  Tele- 
graph Administration,  is  opposed  to  sucli  consolidation  and  quotes  from  a  letter  of  a  British  postal 
investigator  (Major  O'Mcara.  formerly  Chief  Engineer  of  the  British  Post  Office)  with  reference  to 
the  same  subject,  as  follows: 

"I  have  had  the  advantage  during  the  past  18  months  of  having  visited  many  of  the  Euro- 
pean countries  and  of  having  met  many  officers  of  the  Postal  and  Telegraph  services  in  these  coun- 
tries. I  have  found  that  in  every  country  I  have  visited  tliere  is  a  consensus  of  opinion  tliat  today 
the  Postal  Department  should  be  administered  separately  from  the  Telegraph  and  Telephone  De- 
partment, and  in  those  countries  in  which  the  Post,  Telegraphs  and  Telephones  are  combined  un- 
der one  administration  in  theory,  I  have  foimd  that  at  headquarters  the  administration  of  the  Posts 
is  separated  in  practice  from  that  of  the  Telegraphs  and  Telephones,  and  that  this  separation  ex- 
tends in  many  cases  to  the  Provincial  .\dministrations.  As  you  are  aware,  two  Royal  Commis- 
sions have  recently  investigated  the  Organization  of  Posts,  Telegraphs  and  Telephones  in  Italy, 
where  at  the  present  time  the  Telephones  are  under  an  administration  separate  from  that  of  the 
Post  and  Telegraplis.  It  has  been  strongly  urged  by  this  Royal  Commission  that  the  Telegraphs 
should  be  separated  from  the  Posts  and  placed  with  the  Telephones,  and  that  in  future  the  Postal 
Department  should  constitute  an  administration  separate  from  that  of  the  Telegraphs  and  Tele- 
phones."    (See  Appendix  C.) 

Willi  reference  to  the  rent  of  quarters,  it  should  be  noted  that  very  little  saving  is  possible 
through  consolidation  of  telegraph  and  post  offices  for  the  following  reasons: 

1.  The  assumption,  that  in  government  owned  buildings  there  is  space  which  can  be  utilized 
without  additional  cxpcn-'e  for  telegraph  purposes,  is  not  supported  by  facts;  and,  if  so.  would  be 
evidence  of  inefficient  utilization  by  the  Post  Office  of  existing  quarters. 

2.  Only  4,730  postal  stations  and  branches  on  Tune  30.  1912,  were  in  quarters  owned  or 
leased  by  the  government,  and  only  616  were  in  federal  buildings."  In  the  leased  quarters,  pro- 
vided space  has  not  been  wasted,  it  is  obvious  that  very  little  economy  in  rent  could  be  secured  by 
consolidating  the  post  office  and  telegraph  offices. 

3.  There  are  about  49,614  post  offices  of  the  fourth  class.'*''  the  local  expenses  of  which  are 
entirely  covered  by  tiie  postmaster's  salary,  which  does  not  exceed  $1,000.*";  and  it  is  understood 
that  some  24.000  of  these  postmasters  receive  under  $180.  per  annum.  Obviously,  no  additional 
space  could  be  obtained  in  such  offices  without  increasing  the  compensation  therefor. 

B.  RATES  FOR   PRIVATE  AND  GOVERN  M  ENT  TELEGRAPH  SERVICE. 

With  reference  to  telegraph  rates,  Mr.  Lewis'  discussion  relates  to  two  propositions:  the  first, 
that  the  rates  of  the  jirivatc  telegraph  companies  in  the  I'nited  States  are  relatively  high ;  and  the  sec- 
ond, to  illustrate  the  result  of  lack  of  the  public  service  motive,  that  no  reductions  in  the  telegraph 
rates  have  been  made  in  the  United  States  since  1888. 

Assumption  That  Telegraph  Rates  in  the  United  States  Are  Relatively  High. 

Mr.  Lewis  bases  his  statements  that  the  telcgiaph  rates  in  this  country  arc  relatively  hi.gh,  and 
that  they  stillc  development  and  thereby  result  in  insutlkicnl  utilization  of  plant,  on  the  following  sta- 
tistics: 


MR.  LEWIS' 

TABLE  NO.  S. 

Country 

Number 
of  words 

Minimum  rate  and  average  receipt 
per  telegram. 

Telegrams 
per  capita. 

Letter  rates. 

Letters 
per  capita. 

Rate— 

Rank 

Receipt. 

Rank 

Per  word. 

Each  word 
extra. 

No. 

Rank. 

Rate.    Rank.l    No.  |  Rank.| 

Luxemburg  . . . 

France  

Japan  

io 
"io 

15 
10 
10 

1  ■} 
1  1 

"16 

15 
10 

"  io 
— 

'$0,067 
.0965 

' '  '.m 

.0%5 
.1005 
.134 
.12 
.1217 
'.0579 
.119 
.193 
.130 

■  '=.075 
.25 
.30 
.35 
.40 
.50 
.60 
.75 
1.00 

$0.0067 
.0096 

'  .6134 
.0193 
.0201 
.0134 
.01 

.01015 

'.0048 

.0119 

.01015 

.013 

■".625  ■ 
.02 
.02 
.02 
.03 
.03 
.04 
.05 
.07 

9 

1 

"ii 

2 

3 

10 

6 

7 

4 

5 

12 

8 

"13 
14 

0.090 
.121 

.123 

.i-ii 

.150 
.153 
.157 
.172 
.172 
.180 

'.26s 
224 
.251 
.390 
.360 

1 
2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

IS 

17 

16 

0.84 

1.65 

.60 

1.48 

125 

1.19 

.80 

8.01 

2.18 

1.75 

.92 

.55 

1.31 

.73 

.59 

.24 

.97 

11 

4 

14 

S 

7 

8 

12 

1 

2 

3 

10 

16 

6 

13 

IS 

17 

9 

$0.02 
.02 
.015 
.026 
.02 
.02 
.026 
.02 
.02 
.02 
.02 
.028 
.026 
.02 
.02 
.036 
.02 

2 
2 
1 
3 
2 
2 
3 
2 
2 
2 
2 
4 
3 
2 
2 
5 
2 

39 
34 
23 
28 
37 
38 
29 
93 
87 
70 
M 
13 
49 
45 
19 
7 
101 

8 

11 

14 

13 

10 

9 

12 

2 

3 

4 

5 

16 

6 

7 

IS 

17 

1 

Norway 

Belgium    

Netherlands  .  . . 

Sweden  

New   Zealand. 
Great   Britain. 
Switzerland  . . 

Germany  

Italy  

Denmark 

Austria   

Hungary    

Russia  

United  States.. 

Do 

Do 

Do 

Do 

Do 

Do 

Do 

'  Each  telegram.  '  Fixed  charge  per  telegram  plus  charge  for  each  word. 

Tlie  significance  of  the  columns  as  to  telegraph  traffic  development  and  mail  development  are 
discussed  in  "C.  As  to  Social  Inefficiency  or  Inadequacy  of  Private  Telegraph  Systems,"  pages  20  to  22. 
as  to  rates,  Table  Xo.  5  is  incorrect,  incomplete,  and  misleading,  and  the  inferences  drawn  from  it  by  Mr. 
Lewis  are  not  justified  for  the  following  reasons: 

1.  The  comparison  does  not  take  into  account  differences  in  methods  of  counting  chargeable 
words. 

2.  The  comparison  does  not  include  urgent  rates  for  foreign  countries. 

3.  The  comparison  covers  foreign  domestic  rates  only,  whereas  the  international  service  is 
more  nearly  comparable  to  that  given  in  the  United  States. 

4.  The  comparison  of  average  receipts  per  message  is  misleading,  due  to  the  duplications  in 
counting  international  messages  and  the  division  of  international  telegraph  receipts. 

5.  The  comparison  does  not  take  into  account  the  differences  in  the  hauls  of  telegraph 
messages. 

6.  The  comparison  does  not  take  into  account  the  element  of  differences  in  costs. 

7.  The  comparison  covers  only  nominal  prices  and  nominal  receipts  per  message ;  whereas 
the  actual  prices  and  the  actual  receipts  per  message  can  be  ascertained  only  by  including  revenue 
obtained  by  ta.xation  to  cover  telegraph  deficits. 

8.  Mail  rates  are  not  significant  in  comparisons  of  telegraph  rates. 

Each  of  these  errors  or  omissions  is  discussed,  in  the  order  named,  below. 

Before  taking  up  these  errors  in  methods  of  comparison  and  in  interpretation  of  telegraph  rates, 
it  is  desirable  to  make  such  corrections  in  Mr.  Lewis'  statistics  as  are  required  for  a  fair,  accurate 
discussion. 

First,  a  word  as  to  the  terminology  adopted  by  Mr.  Lewis  in  this  table.  In  connection  with 
rates,  "number  of  words"  evidently  refers  to  the  number  of  words  permitted  at  the  minimum  charge; 
"rate  per  word"  obviously  means  "minimum  charge";  and  "rate  each  extra  word"  clearly  should  be 
"rate  per  word  additional  to  those  allowed  under  the  minimum  charge."  Furthermore,  it  is  assumed 
that  the  term,  "average  receipt  per  telegram,"  represents  the  average  gross  revenue  per  paid  message, 
as  otherwise  the  figures  would  have  little,  if  any,  general  significance. 

With  this  terminology  in  mind,  corrections  are  necessary  in  Mr.  Lewis'  statistics  as  to  the  num- 
ber of  words  permitted  at  the  minimum  rates,  as  to  the  amount  of  the  minimum  charge,  and  as  to  the 
average  receipts  per  message. 


13 

NUMBER  OF  WORDS  PERMITTED  AT  THE  MINIMUM  CHARGES. 

Country.  .-Xccording  to  Mr.  Lewis  The  Facts. 

Luxemburg"  '>  10 

Sweden"    lU  5 

Italy-   15  10 

AMOUNT  OF  MINIMUM  CHARGE. 

Country.                                                                               According  to  Mr.  Lewis.  The  Facts. 

Sweden"    $0,134  $0,067 

Italy"    .193  .116 

In  Belgium"'*  and  The  Netherlands"'  the  charge  for  excess  words  is  quoted  only  for  groups  of 
five  words  for  telegrams  of  fifty  words  or  less.  Mr.  Lewis  has  not  noted  this.  The  charge  per  excess 
word  in  Italy  is  $.00965,  as  against  $.01015  shown  by  Mr.  Lewis". 

.WERAGE  "RECEIPT  PER  TELEGRAM." 
(This  table  is  not  significant  in  comparisons  with  revenues  per  message  in  the  United  States, 
for  the  reason  given  under  "4"  following.j 

Country.  Mr.  Lewis'  Figure.  Best  Figure  Obtainable. 

Luxemburg  ?0.090  $0,090" 

France   .121  .173=" 

Japan    .123  .14i;' 

Norway   .213'' 

Belgium     .142  .137" 

Netherlands    .ISO  .151" 

Sweden    .153  .159" 

New   Zealand    .157  .155° 

Great  liritain  .172  .177" 

Switzerland .172  .140" 

Germany   .180  ACti" 

Denmark   205  .144" 

Austria  224  .169" 

Hungary    251  .ISO'' 

Russia    .390  .431" 

United   States   .360 

1.    DIFFERENCES  IN  METHODS  OF  COUNTING  CH.\RGEABLE  WORDS. 

It  is  obvious  that  no  unqualified  comparison  of  telegraph  rates  can  be  significant  unless  the 
rules  as  to  chargeable  words  are  identical.  As  the  American  rules  are  absolutely  different  from 
the  foreign  rules  concerning  words  in  addresses  and  signatures  of  telegrams,  it  is  apparent  that  Mr. 
Lewis  has  not  taken  into  account  a  factor  of  vital  importance  in  comparing  American  with  foreign 
telegraph  rates. 

The  words  of  the  address  and  signature  are  not  charged  for  under  Ainerican  practice,  with 
minor  exceptions  as  to  signatures,  whereas  a  charge  is  made  for  such  words  under  European 
practice"'.  The  nuniber  of  such  words  per  telegrain  that  are  free  in  the  United  States,  but  charged 
for  in  Europe,  is  about  eleven  by  the  American  counting  rules,  and  about  ten  by  the  European 
rules"-.  Although  it  is  true  that  the  actual  average  number  of  words  in  the  address  and  signature 
is  much  less  in  Europe  than  in  the  L^nited  Slates,  it  is  noteworthy  that  the  American  method  is 
distinctly  a  part  of  the  telegraph  service  to  patrons,  and  that  the  European  method  forces  the  use 
of  code  addresses. 

The  significance  of  the  difference  between  the  American  and  the  European  methods  is  in- 
dicated by  the  fees  which  the  foreign  public  pays  for  the  registration  of  addresses.    I'or  exainple: — 

Annual  Charge  for  Registering 
Country.  Telegraph  Addresses. 

Great  Britain" I  1-1  ($5.10) 

Germany"    M.  30  ($7.15) 

France" Fr.  40  ($7.70) 

Austria"  Kr.  40  ($8.10) 

It  will  be  apparent  from  the  above  that  in  comparing  Ainerican   with   foreign   telegraph 

rates,  some  method  of  taking  into  account  the  differences  in  the  treatment  of  words  in  addresses 

and  signatures  must  be  secured.     Probably  the  most  accurate  method  of  doing  this  is  to  compare 

the  American  rates  for  ten  words  of  text,  tiie  address  and  signature  being  free,  with  the  foreign 

rates  for  twenty  words,  on  the  assumption  that  patrons  in  foreign  countries  will  require,  as  in 

the  I 'nitcd  States,  an  average  of  nt  least  ten  words  for  the  ad<lress  and  signature.    Since,  however, 

the  foreign  practice  restilts  in  addresses  of  an  average  of  five  words,  by  the  use  of  registered 

addresses,  an  additional  comparison  should  be  made  between  the  American  rates  for  telegrams  of 

ten  words  of  text  and  those  for  foreign  telegrams  of  fifteen  words,  including  address,  signature 

and  text.     Such  comparisons  are  given  on  jiage  14. 


14 


A  further  difference  in  methods  of  counting  words  relates  to  those  in  the  text, 
ican  practice  is  liberal  as  compared  with  foreign  practice.     For  example: 


The  .\mer- 


Countrv. 

New  South  Wales. 

DuBois    

Frank  lort-on-Main 


Europc.in  Count" 

No.  of  Wonls. 


Americ.in  Count 
No.  oi  Words. 

1 
1 

1 


2.     FAILURE  TO  INCLUDE  URGEXT  RATES  FOR  FOREIGN  COUNTRIES. 

The  rates  quoted  by  Mr.  Lewis  for  foreign  countries  are  for  "ordinary,"  not  "preferred," 
telegrams,  whereas  the  rates  quoted  for  the  United  States  are  for  regular  day  messages — a  prompt 
service  equal  to  the  foreign  "urgent"  or  "preferred"  service.  It  should  be  noted  that,  as  to  the 
United  States,  Mr.  Lewis  has  made  no  reference  to:  (a)  day  letters  (a  non-urgent  day  telegram 
subject  only  to  the  priority  of  day  messages) ;  (b)  the  night  message,  which  is  a  reduced  rate 
for  night  service;  and  (c)  the  nigiit  letter,  a  deferred  night  message^'. 

It  is  not  intended  to  imply  that  the  American  deferred  services  are  exactly  comparable  with 
the  European  deferred  services,  or  that  the  preferred  service  in  the  United  States  and  Europe  are 
exactly  comparable.  Nevertheless,  the  mere  existence  of  an  urgent  rate  in  Europe  indicates  tliat 
a  high  charge  must  be  paid  to  secure  the  kind  of  service  whicii  the  American  systems  are  equipped 
to  handle  as  a  matter  of  course.  Hence,  it  is  true  that  Mr.  Lewis  should  have  compared  the  Eu- 
ropean "preferred"  rates  with  the  American  day  message  rates,  at  least  in  addition  to  using  the 
European  ordinary  rates. 

The  following  table  has  been  prepared  to  remedy  some  of  the  omissions  of  Mr.  Lewis' 
Table  No.  5.  In  preparing  this  table,  the  rates  shown  for  foreign  countries  are  for  toi  -words  of 
text,  which  are  allowed  under  the  American  minimum  rates,  plus  ten  words  of  address  and  signa- 
ture, the  average  used  in  the  United  States  by  European  count,  and  charged  for  in  Europe ;  and 
also  for  ten  words  of  text  plus  five  words  of  address  and  signature,  the  probable  actual  average 
in  Europe: 

TABLE  OF  COMPAR.'KTIVE  TELEGRAPH  R.\TES  FOR  TELEGRAMS  WITH  TEN  WORDS  OF  TEXT. 

DOMESTIC  RATES  ONLY. 


Country. 


Lu.xemburg"    . , 

France"*    

Norway"  

Belgium"  

Netherlands"    . 

Sweden"    

New   Zealand" 
Great  Britain"  , 
Switzerland"    . 

Germany"    

Italy"    

Denmark"  

Austria**    

United   States    . 
United   States    . 


Ordina 

ry  Kates 

Preferred  Rates 

for  10  Wo 

rds  of  Te.xt 

for  10  Words  of  Text 

.•\ddress  and  Signature 

Address  and  Signature 

Assumed  to  Average : 

Assumed  to  Average : 

10  Words. 

5  Words. 

10  Words. 

5  Words. 
$0,307 

$0,136 

$0,102 

$0,407 

.193 

.145 

No  urgent  rate 

.268 

201 

.804 

.603 

.116 

.096 

232 

.193 

.141 

.121 

282 

.242 

.268 

201 

.804 

.603 

.20 

.15 

.40 

.30 

20 

.131 

No  urgent  rate 

.154 

.15 

No  urgent  rate 

.238 

.179 

.714 

.536 

.212 

.164 

.637 

.492 

.268 

201 

.804 

.603 

.244 

.183 

.731 

.549 

25 

25 

25 

25 

.30 

.30 

.30 

.30 

Rates  in  the  L'nited  States  higher  than  30  cents  are  not  shown,  as  they  apply  to  distances 
greater  than  ordinarily  obtain  under  the  foreign  domestic  rates. 

It  will  be  observed  from  this  table  that  the  foreign  ordinary  rates  in  many  cases  approxi- 
mate the  American  rates;  and  that  tlie  foreign  urgent  rates  are  from  two  to  three  times  the 
American  rates  in  several  instances,  and  are  lower,  even  assuming  an  average  of  five  words  in 
address  and  signature,  in  only  two  cases. 

3.    FAILURE  TO  INCLUT)E  FOREIGN  INTERNATIONAL  RATES. 

Mr.  Lewis'  Table  No.  5  is  misleading  and  incomplete,  not  only  because  of  the  omission  of 
"urgent"  rates  in  foreign  countries,  but  also  because  he  has  included  only  the  domestic  (i.  e.,  in- 
ternal) rates  for  European  countries.  His  failure  to  include  international  rates  is  a  matter  of  great 
importance,  because  of  the  very  small  size  of  the  European  countries,  as  compared  with  the  United 
States,  and  because  of  the  short  hauls  which  European  domestic  rates  cover.    Detailed  information 


15 

as  to  lengths  of  hauls  is  given  under  "5"'  below ;  but  at  this  point  it  will  be  significant  to  give  a 
few  European  international  rates  in  comparison  v/ith  domestic  rates,  to  show  that  the  international 
rates  are  very  much  higher  than  the  domestic  rates. 

COMPARISON  OF  INTERNATIONAL  A\D  DOMESTIC  TELEGRAPH  RATES  FOR  MESSAGES  OF  15 
WORDS,  INCLUDING  THOSE  I.\  THE  ADDRESS  AND  SIGNATURE,  COMPARA- 
BLE WITH  AMERICAN  10  WORD,  DAY  MESSAGES. 


From 


c 

n 

o 

^ 

>. 

u 

(A 

rt 

= 

^ 
rt 

V 

C 

c 

ca 

c 

P 

ot 

c  E 

o  c 

o  E 

o^ 

o  a 

h1 

1~     M 

i-  g 

H« 

HS 

H-o 

H£ 

Q 

< 

cs 

o 

d, 

a 

ffi 

a 

m 

Austria" 

Ordinary 
Urgent  . . 

Belgium" 

Ordinary 
Urgent  . . 

Denmark** 
Ordinary 
Urgent  . . 

France" 

Ordinary 
Urgent  .  . 

Germany" 
Ordinary 
Urgent  . . 

Holland" 

Ordinary 
Urgent  . . 

Great   Britain" 
Ordinary 
Urgent  .. 

Sweden" 

Ordinary 
Urgent   .  . 

Switzerland" 
Ordinary 
Urgent  .. 


$0,183 
.549 

$0609 
1.827 

$0,670 
2.010 

$0,609 
1.827 

$0,183 
.549 

$0,609 
1.827 

$0,822 

$0,761 

2284 

.096 
.193 

$0,618 
1.853 

.  .   •  • 

.537 
1.592 

.357 
1.071 

.357 
1.071 

.241 
.724 

.589 

.675 
2.026 

.201 
.603 

.750 
2.251 

.536 
1.608 

.683 
2.050 

.469 
1.406 

.643 
1.930 

.757 

n 

.271 
.814 

.145 

.579 
1.737 

.362 
1.086 

.579 
1.737 

.434 
1.303 

.463 
1.390 

.579 

.724 
2.171 

.179 
.536 

.179 
.536 

.357 
1.071 

.357 
1.071 

.428 
1.285 

.357 
1.071 

.535 

.535 
1.606 

.121 
.241 

.603 
1.809 

.253 
.759 

.573 
1.719 

.482 
1.447 

.392 
1.176 

.... 

.603 

.663 
1.990 

.150 

.757 

.606 

.757 

.606 

.606 

.606 

.757 

.201 
.603 

.724 
2.171 

.637 
1.911 

.281 
.844 

.724 
2.171 

.511 
1.533 

.637 
1.911 

.757" 

.131 

* 
• 

.574 
1.723 

.574 
1.723 

.386 
1.158 

.386 
1.158 

.574 
1.723 

.806 

.675 
2.026 

* 

$0,560 
1.679 

.643 
1.930 

.362 
1.086 

.357 
1.071 

.573 
1.719 

.757 


.637 
1.911 


The  rates  in  both  directions  frequently  differ,  due   to   the   various   monetary  systems   in   Europe  and   to 
slight  differences  in  rates  methods. 

♦Not  shown  because  Austria  is  divided  into  zones  for  purposes  of  international  service  with  Switzerland, 

It  will  be  noted  from  this  comparison  of  domestic  and  international  telegraph  rates  that, 
with  tiie  e.xccption  of  Denmark-Sweden,  Austria-Germany  and  Switzerland-Austria,  the  interna- 
tional rates  are  at  least  double  the  domestic  rates;  and  that  on  none  of  the  other  international  traffic, 
even  between  points  on  adjacent  borders  not  distant  more  than  ten  miles,  is  the  rate  as  low  as  the 
mininnnn  rate  in  tiie  United  Stales,  with  the  exception  of  Ilclgium-lloliand,  which  is  about  equal. 
Indeed,  it  will  be  apparent  that  the  rates  for  international  traffic  are,  as  a  whole,  inuch  higher  than 
those  in  the  United  States,  even  for  "ordinary"  service;  and  immeasurably  higher,  for  "urgent" 
service. 

4.     AVERAGE  RECEIPTS  PER  MESSAGE  ERRONEOUS  AS  TO  COMPARISONS  W  ITII 
TIIE  UNITED  STATES. 

Statistics  of  average  receipts  per  message  arc  obviously  intended  to  show  an  average  charge 
l)cr  message  to  the  patron,  for  use  in  comparisons;  but  such  statistics  are  significant  only  when 
compiled  on  the  same  basis.  No  sucli  statistics,  however,  can  be  compiled  on  the  same  basis  for 
the  United  States  and  for  European  countries.  Tiiis  is  due  to  the  very  great  duplication  in  count- 
ing international  messages  in  Europe,  and  to  the  fact  that  the  revenues  from  international  messages 
are  divided  between  the  administrations  iiandling  them  in  each  case.  For  e.\ample,  a  telegram 
passing  from  France  to  Sweden  (via  Germany)  is  counted  as  a  message  in  France,  in  Germany 
and  in  Sweden ;  and  the  total  revenue  tiieref rom  ( for  transmission  between  the  offices  of  receipt 
and  destination)  is  divided  between  these  countries  in  about  the  following  proportions:  France 
36%;  Germany  287o  ;  and  Sweden  36%".  The  ordinary  (i.  e.,  non-urgent)  rate  from  Paris  to 
Stockholm  for  15  words  (including  average  of  five  for  address  and  signature)   is  $.724,   for  a 


16 


distance  of  about  1,000  miles.  The  rate  from  New  York  to  Chicago  for  10  words  of  text  (address 
and  signature  not  charged  for)  is  50  cents  for  about  the  same  distance.  In  Mr.  Lewis'  statistics, 
one  message  from  Paris  to  Stockhohn  is  counted  as  three,  at  an  average  of  about  25  cents  each ; 
but  tlie  message  from  New  York  to  Chicago  will  be  included  as  one  message,  at  50  cents.  Similarly, 
the  rate  for  a  message  of  15  words  (including  five  for  address  and  signature)  from  Paris  to 
\"ienna,  a  ilistance  of  from  600  to  700  miles,  is  $.579.  In  Mr.  Lewis'  table  such  a  message  would 
be  treated  as  three  messages  (via  Germany),  at  an  average  of  $.193  each. 

It  will  be  apparent  that  Mr.  Lewis'  comparison  is  very  greatly  in  error,  both  theoretically,  (as 
indicated  above),  and  practically,  due  to  the  fact  that  the  international  traffic  of  European  countries 
is,  in  some  cases,  two  or  three  times  as  large  as  the  domestic  traffic.  This  will  be  shown  more  fully 
hereinafter,  in  connection  with  the  analysis  of  Mr.  Lewis'  statistics  of  telegraph  traffic  develop- 
ment. 

5.    EFFECT  OF  LENGTHS  OF  HAULS  ON  AX'ERAGE  TELEGRAPH  RE\^ENUES. 

As  is  evident  from  the  comparison  of  domestic  and  international  rates,  page  15,  the  Eu- 
ropean international  rates  are  higher  than  the  American  rates  for  similar  distances.  As  to  domestic 
rates,  however,  the  element  of  length  of  haul  is  a  vital  one,  to  which  no  attention  is  called  by  Mr. 
Lewis.  The  longer  average  hauls  in  the  United  States  would  naturally  make  rates  and  revenues 
per  message  higher  than  the  respective  domestic  rates  and  domestic  revenues  per  domestic  message 
in  Europe.  This,  combined  with  the  facts  that  the  traffic  is  naturally  short  haul  in  Europe,  and 
that  telegraph  traffic  is  naturally  long  haul  in  the  L'nited  States  (cue  largely  to  higher  telephone 
development),  shows  that  the  conditions  are  so  essentially  different,  as  to  make  the  comparisons 
of  American  average  revenues  per  message  with  European  averages,  without  significance. 

The  importance  of  the  factor  of  lengths  of  hauls  is  clearly  indicated  by  the  following: 
(a)     Comparative  Areas  and  Distances  in  Foreign  Countries  and  in  the  United  States. 


Country 


Approx.  Area 
in  Sq.  Miles 


Percent,  of 
U.  S.  Area 


Approx.  Maximum 
.•\ir  Line  Dimension 


Per  cent. 
Maximum 
Air  Line 
Distance 
to  U.  S. 


United  States"  . 
New  Zealand   . . 

Austria    

Belgium 

Denmark    

France  

German  Empire 
Great  Britain    . . 

Hungary  

Italy   

Luxemburg    . . . . 
Netherlands    .  . . 

Norway    

Sweden   

Switzerland   . . . . 


3,026,789 
KM.751 
115.800 

11.400 

14.S00 
207.000 
208.800 
121.400 
125.600 
110,700 
998 

12,600 
124.100 
172,900 

16,000 


100.0 
3.5 
3.8 
.4 
.5 
6.8 
6.9 
4.0 
4.1 
37 

.4 
4.1 
57 

.5 


3,000 
800 
800* 
170 
250 
700 
900 
770 
800* 
730 
50 
210 

1,000 
960 
200 


100.0 

29.4 

26.6* 

5.7 

8.3 

30.0 

25.6 

26.6* 

24.3 

17 

7.0 

33.3 

32.0 

6.7 


♦This  is  the  maximum  east  and  west  distance  of  Austria  and  Hungary  combined, 
(b)     Significant  Comparisons. 

The  average  length  of  haul  for  Western  I'nion  telegrams  is  about  570  miles""  and  there- 
fore exceeds  the  maximum  possible  (not  the  average)  haul  in  lielgium,  Denmark,  Luxemburg, 
Netherlands  "and  Switzerland,  the  domestic  rates  of  which  Mr.  Lewis  compares  with  those 
of  the  United  States. 

The  averat^e  leni^tli  of  haul  on  Western  L'nion  night  letters  is  1,025  miles  ""  and  exceeds 
the  maximum  possible  domestic  haul  (i.  e.  air-line  distance)  in  the  principal  countries  the  rates 
of  which  are  used  by  Mr.  Lewis ;  and  the  average  haul  on  American  niglit  letters  is  nearly  tivice 
the  average  distance  between  the  largest  47  cities  in  western  Europe  (600  miles""). 

The  average  haul  on  domestic  commercial  telegrams  in  Belgium  is  officially  stated  to 
be  42.5  miles"',  .\ccording  to  the  "Journal  Telegraphiquc,"  domestic  messages  constitute  about 
66^1  of  the  total  originating  commercial  messages  in  Belgium"-.  Less  than  5%  of  the  Western 
Union  traffic  is  for  hauls  of  40  miles  or  less"'. 

More  than  90%  of  the  telegraph  traffic  originating  in  Great  Britain  is  domestic.  The 
mean  distance  between  the  largest  cities  in  Great  Britain  is  about  150  miles.  More  than  50% 
of  the  business  of  the  Western  Union  Company  exceeds  200  miles"'. 


17 

From  the  above  it  will  be  apparent  that  Mr.  Lewis  should  not  have  compared  rates 
in  the  United  States  with  the  domestic  rates  of  foreign  countries.  However,  the  significance 
of  these  facts  may  be  more  clear  from  a  comparison  of  results  in  New  Zealand  and  in  Australia, 
English  speaking  countries  very  similar  in  commercial  and  social  aspects,  but  dittering  greatly 
as  to  area  and  distances  between  cities.  The  revenue  per  message  in  Australia  was,  in  1911, 
$.26.°°  It  was,  in  New  Zealand,  in  1913,  $.155.^'  In  both  cases  there  was  a  heavy  deficit 
(see  Appendix  D)  ;  but  the  higher  rates  in  Australia  and  the  deficits,  as  stated  hereinbefore, 
are  officially  explained  as  due  to  the  extent  of  territory  and  length  of  lines  required." 

6.  DIFFERENCES  IN  COST  OF  SERVICE. 

The  wage  schedules  in  the  United  States  are  much  higher  than  those  in  foreign  countries. 
(See  Appendix  E).  Moreover,  government  systems  pay  no  taxes,  whereas  the  private  systems 
contribute  to  the  support  of  both  national  and  local  governments.  These  are  elements  of  cost, 
of  great  importance  in  comparing  rates,  which  Mr.  Lewis  entirely  disregards,  without  consider- 
ing the  effect  of  extent  of  territory  and  lengths  of  hauls  on  the  cost  of  the  business,  even  if  all 
other  conditions  were  equal. 

In  other  words,  Mr.  Lewis  has  assumed  that  the  value  of  money  is  the  same  in  all  coun- 
tries; whereas  it  is  a  matter  of  general  knowledge  that  the  value  of  money  is  much  less  in  the 
United  States  than  in  Europe.  This  is  not  only  proven  by  the  statistics  given  in  Appendix  E, 
but  by  competent  foreign  investigators.  For  example,  the  British  Board  of  Trade  found  that  "the 
money  earnings  of  the  workman  in  the  United  States  are  rather  more  than  two  and  one-quarter 
times  as  great  as  in  England  and  Wales,  and,  since  there  is  no  proof  that  employment  is  more 
intermittent  in  the  United  States  than  in  this  country,  a  much  greater  margin  is  available,  even 
when  allowance  has  been  made  for  the  increased  expenditure  in  food  and  rent."" 

A  candid  .study  of  the  values  of  money  in  European  countries  leads  to  the  conviction  that 
the  American  telegraph  rates  arc  not,  in  fact,  higher  than  even  the  domestic  deferred  rates  of  Eu- 
ropean countries ;  and  that  the  jircferrcd  and  international  foreign  rates  are  very  much  higher 
than  rates  for  similar  service  in  the  I'nited  States — in  fact,  as  to  the  latter,  it  has  been  shown 
that  this  is  true  without  consideration  of  the  value  of  money. 

7.  TELEGRAPH  DEFICITS. 

In  the  preceding  discussion  of  rates  for  telegraph  service,  the  assumption  that  the  nominal 
rates  or  revenues  from  telegraph  traffic  represent  the  full  charge  for  service,  has  been  accepted; 
but  no  conclusion  in  this  matter  can  be  reached  without  consideration  of  the  financial  results  of 
the  telegraph  service.  This  is  necessary  because,  when  a  deficit  is  incurred,  the  nominal  rates  and 
the  nominal  revenues  do  not  indicate  the  full  price  of  the  service,  but  merely  that  portion  of  the 
price  which  is  paid  by  the  telegraph  patrons.  The  question  of  national  policy,  as  to  whether  the 
entire  population  or  all  the  patrons  of  mail  service  should  bear  a  part  of  tlie  cost  of  the  telegraph 
service,  the  general  or  frequent  use  of  which  Is  inevitably  restricted  by  cost  in  every  country  to 
certain  commercial  and  social  classes,  need  not  be  considered  here.  The  purpose  should  be 
solely  to  determine  whether  or  not  the  rates  and  revenues  used  by  Mr.  Lewis,  even  after  the  many 
corrections  of  fact  and  of  statistical  method  which  they  require,  are  true  statements  of  the  charges 
to  the  pul)lic  for  telegraph  service. 

It  is  certain  that  in  many  countries,  and  it  is  probable  that  in  all  countries,  the  telegraph 
rates  of  which  Mr.  Lewis  has  used  for  comparative  purposes,  a  heavy  deficit  is  incurred  in  the 
telegraph    service.     The    following   information  supports  this  statement : 


IS 


TELEGRAPH  DEFICITS. 
(For  additional   information   and   for  references  and  authorities,  see  Appendix  D.) 


Country. 

Deficit. 

"/c  Delicit 
to  Revenue. 

Note. 

Austria  



$i.8sb',666 

3.500.000 
4.053,771 

67 1.43  i 

799.266 
313,212 

23 
45 
30 

62* 

22 
20 
23 

See  Appcndi.x   D 
No  information 
See  Appendix   D 

No  information 
No  information 

No  information 
See  Appendix   D 
Domestic  telegraph  business 

Including  telephone  tolls 

Belgium   

France    

Great  Britain  

Italy    

Netherlands   

Norway   

Sweden 

Switzerland    

Australia   

New  Zealand   

♦Netherlands  makes  a  serious  attempt  to  treat  the  accounts  of  the  postal  services  on  a  com- 
mercial basis  as  a  matter  of  permanent  practice.  In  Australia,  the  figures  were  prepared  by  special 
investigation. 

8.    COMPARISONS  OF  MAIL  R.\TES  WITH  TELEGRAPH  RATES. 

Although  the  above  analysis  of  Mr.  Lewis'  rate  comparisoa  is  probably  sufficient  to  show 
tlie  fallacy  of  his  conclusions,  for  the  sake  of  completeness  some  comment  is  necessary  concern- 
ing his  use  of  mail  rates  as  a  criterion  for  telegraph  rates. 

It  needs  no  general  discussion  to  show  that  first-class  mail  and  telegrams  are  so  dis- 
similar that  there  can  be  no  significant  relation  between  their  cost.  However,  assuming  that  there 
were  a  fi.xed  relation  between  the  cost  of  handling  mail  and  of  handling  telegrams,  the  wide  varia- 
tion in  the  telegraph  rates  and  revenue  in  the  various  foreign  countries  having  a  2-cent  postage 
rate  shows  that  the  telegraph  rates  do  not  conform  to  such  an  assumed  relation.  For  example: 
the  receipts  per  message  (corrected  as  given  on  page  13)  are,  in  Luxemburg  4>^  times  the  post- 
age rate ;  in  France  8,'^  times  the  postage  rate ;  in  Norway  8  times  the  postage  rate ;  in  Denmark 
about  5  times  the  postage  rate,  etc.,  so  that  there  is  apparently  no  approximately  consistent  rela- 
tion between  the  two. 

To  summarize  this  analysis  of  Mr.  Lewis'  comparison  of  telegraph  rates:  It  appears  not 
only  that  Mr.  Lewis'  comparison  is  incorrect  and  misleading,  but  that  the  facts  positively  justify 
conclusions  contrary  to  those  reached  by  Mr.  Lewis  from  his  incoinplete  study.  The  facts  are 
that  the  American  rates  for  regular  day  message  service  are  about  equal  to  the  foreign  rates  for 
domestic  deferred  service ;  and  that  the  American  rates  are  lower  than  the  rates  for  the  "pre- 
ferred" service,  and  very  much  lower  than  those  for  international  service  of  any  kind.  This  con- 
clusion is  reached  without  consideration  of  the  American  reduced  rates  for  the  popular  day  let- 
ters, night  messages,  and  night  letters. 

Statement  that  Telegraph  Rates  in  the  United  States  Have  Not  Been  Reduced  Since  1888. 

Mr.  Lewis  makes  much  of  the  assumption  that  telegraph  rates  in  the  United  States  have 
not  been  reduced  since  1888,  as  showing  how  absence  of  the  '"public  service  motive,"  even  with 
competition,  affects  rates ;  but  Mr.  Lewis  is  seriously  in  error  even  as  to  the  facts  concerning  his 
own  country.     The  facts  are  as   follows: 

During  the  past  25  years  rates  in  the  western  and  southern  parts  of  the  United  States  (in- 
cluding eastern  rates  to  the  west  and  south )  have  been  substantially  reduced,  and  the  tendency 
for  all  rates  has  been  downward, — without  reference  to  the  introduction  of  night  letters  (adopted 
March  1,  1910)  and  day  letters  (adopted  March  1,  1911).  In  fact  as  recently  as  July  1.  1912,  the 
Western   Union  Telegraph   Company   made   substaitial   reductions  in  5,000,000  to  6,000,000  rates. 

A  brief  history  of  telegraph  rates  in  the  United  States  and  in  Europe  (ordinary  rates) 
is  given  in  Appendix  F. 

In  connection  with  his  di.scussion  of  American  telegraph  rates.  Mr.  Lewis  quotes  a  specious, 
but  unfair  and  misleading  statement  concerning  the  history  of  the  Chicago  and  Milwaukee  Tele- 
graph Company  and  its  rates.  So  far  as  this  statement  is  used  by  Mr.  Lewis  to  indicate  the  effect 
of  "the  private  motive"  on  rates  and  traffic,  the  following  may  be  noted : 


19 

1.  The  Chicago  and  Milwaukee  Telegraph  Company  was  not  organized  for,  and  during  its 
entire  history  has  done  practically  no  general  commercial  telegraph  business.  It  had  no  messen- 
gers, and  received  and  transmitted  public  commercial  messages  only  by  telephone.  Its  rate  his- 
tory does  not  apply  to  ordinary  telegraph  business. 

2.  Its  business  was  of  a  purely  speculative  character  in  "puts'"  and  "calls"  between  the 
floors  of  the  Chicago  and  the  Milwaukee  Boards  of  Trade.  Its  messages  were  very  short,  en- 
abling it  to  transmit,  with  a  small  force  and  a  small  plant,  a  very  great  number  of  messages  within  a 
few  hours;  and  it  did  not  operate  its  business  except  during  business  hours. 

3.  It  leased  its  wires  at  night  to  other  concerns  (Associated  Press).  As  it  had  only  tlie 
Chicago-Milwaukee  line,  this  was  equivalent  to  obtaining  revenue  producing  business  at  all  hours 
on  its  entire  plant.     In  an  extended  public  telegraph  system  this  would  obviously  be  impossible. 

4.  The  rates  of  the  Chicago  and  Milwaukee  Telegraph  Company  could  cover  its  expenses 
(not  including  profit)  only  when  the  volume  of  the  special  type  of  business,  for  which  its  rates 
were  made,  continued.  Due  to  external  factors,  the  "option"  business  between  Chicago  and 
Milwaukee  declined  or  ceased  about  1900.  Moreover,  the  company  had  not  provided  for  de- 
preciation under  its  rates,  and  had  to  reconstruct  its  plant  about  1900-1902  with  new  capital.  These 
factors  were  largely  responsible  for  the  failure  of  the  company  in  1905.  It  is  believed  to  have 
been  in  substantially  the  same  hands  from  the  time  of  its  organization  until  the  appointment  of 
a  receiver.  Its  failure  is  therefore,  to  be  attributed  partly  to  the  fact  that  it  had  not  during  its 
prosperous  years  provided  for  depreciation,  but  chiefly  to  the  fact  that  its  special  type  of  business 
declined  for  reasons  other  than  those  of  competition. 

5.  The  Chicago  and  Milwaukee  Telegraph  Company  was  taken  by  the  Bell  interests  prior 
to  their  association  with  the  Western  Union  Telegraph  Company,  for  the  use  of  the  telephone 
business  of  the  Chicago  Telephone  Company  and  the  Wisconsin  Telephone  Company,  and  not  for 
telegraph  purposes,  nor  for  the  benefit  of  any  other  telegraph  company.  Its  rate  history  sub- 
sequent to  its  bankruptcy  is  not  related  to  the  telegraph  business  as  such,  but  solely  to  the  feel- 
ing that  its  owners  could  not  be  justified  in  incurring  an  absolute  loss  in  a  business  which  they 
did  not  want,  and  never  had  wanted,  and  for  which  they  did  not  purchase  the  property. 

Tlie  rate  history  given  by  Mr.  Lewis,  with  its  significant  omissions,  may  be  indicative 
of  the  relation  between  rates  and  volume  of  traffic,  although  the  special  circumstances  cited  above 
make  even  this  doubtful ;  but  it  may  be  pertinent  to  a  general  discussion  of  telegraph  rates  to  point 
out  that  it  is  generally  considered  contrary  to  sound  public  or  private  policy  to  subsidize  stock 
exchange  and  speculative  transactions  in  futures  for  the  sake  of  greater  traffic  of  this  character, 
at  the  expense  of  the  general  public. 

C.        AS    TO     SOCIAL     INEFFICIENCY     OR     INADEQUACY     OF     PRIVATE    TELEGRAPH 

SYSTEMS. 

The  preceding  discussion  has  shown  that  the  efficiency  of  private  telegraph  oficration  is  not 
lower  but  higher  than  that  of  the  government  systems ;  and  that  the  rates  for  privately  operated 
telegraph  aervice,  all  things  considered,  are  lower  than  in  foreign  countries.  However,  in  the 
final  analysis,  the  ilevclopment  of  the  service  and  the  adequacy  of  telegraph  facilities  are  prob- 
ably the  most  important  tests  of  rates  and  efficiency.  Tliis  Mr.  Lewis  recognizes  and  emphasizes; 
and  he  therefore  attempts  to  support  his  criticism  of  efficieiKy  of  operation  and  of  rates  for  service 
with  the  further  assumptions:  (1)  that  the  development  of  telegraph  traffic  in  the  United  States 
is  relatively  low ;  and  (2)  that  the  facilities  for  the  receipt  of  telegrams  in  the  United  States  are 
relatively    restricted. 

Assumption  that  Telegraph  Traffic  Development  in  the  United  States  is  Relatively  Low. 

Mr.   Lewis  bases  his  assumption  as  to  telegraph  traffic  development  on  the   following  table, 
which  has  already  been  discussed  as  to  rates  and  revenues: 


20 


MR.  LEWIS'  TABLE  KO.  6. 


Ojuntry. 


Number 
of  words. 


Minimum  rate  and  average  receipt  per 
telegram. 


Telegrams 
per  capita. 


Rate 


Per 
word. 


Each 
word 
extra. 


Rank.  Receipt. 


Rank. 


Num- 
ber. 


Rank. 


Letter  rates. 


Rate. 


Rank 


Letters  per 
capita. 


Num- 
ber. 


Rank 


Lu.xemburg    . , 

France   

Japan   

Norway 

Belgium  

Netherlands    . 

Sweden 

New  Zealand 
Great  Britain 
Switzerland  . 
Germany   .... 

Italy    

Denmark  

Austria 

Hungary    .... 

Russia   

United 

Do 

Do 

Do 

Do 

Do 

Do 

Do 


States 


10 

io 

IS 
10 
10 
12 
12 

io 

15 
10 


10 


■$0,067 
.0965 

'  AM 
.0965 
.1005 
.134 
.12 
.1217 

".0579 
.119 
.193 
.130 


'.075 
.25 
.30 
.35 
.40 
.50 
.60 
.75 

1.00 


».0067 
.0096 

'  '.6i34 
.0193 
.0201 
.0134 
.01 

.01015 
'.0048 
.0119 
.01015 
.013 


'.025 
.02 
.02 
.02 
.03 
.03 
.04 
.05 
.07 


9 

1 

ii 

2 
3 

10 
6 
7 

4 

5 

12 

8 


13 
14 


).090 
.121 
.123 

'.i42 
.150 
.153 
.157 
.172 
.172 
.180 

.205 
.224 
.251 
.390 
.360 


3 

4 

S 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

17 

16 


0.84 

165 

XO 

148 

1.25 

1.19 

.80 

8.01 

2.18 

175 

.92 

.55 

1.31 

.73 

.59 

.24 

.97 


11 
4 

14 

5 

7 

8 

12 

1 

2 

3 

10 

16 

6 

13 

15 

17 

9 


$0.02 

.02 

,015 

.026 

.02 

,02 

026 

,02 

,02 

.02 

,02 

,028 

,020 

.02 

,02 

,036 

,02 


39 
34 
23 
28 
37 
38 
29 
93 
87 
70 
64 
13 
49 
45 
19 
7 
101 


8 

11 

14 

13 

10 

9 

12 

2 

3 

4 

S 

16 

6 

7 

IS 

17 

1 


'Each  telegram.  'Fixed  charge  per  telegram  plus  charge  for  each  word. 

From   these   statistics   it   appears   that   the  United    States    ranks    first   as    to   development    in 
mail   traffic,   and  ninth  as  to  development  of  telegraph  traffic;  and  the  inferences  are,  that  the  devel- 
opment  of  telegraph   traffic  under  private  operation   is   low,   and  that   under  government  operation 
in  the  United  States  the  development  of  telegraph  traffic  would  be  high.    These  inferences  are  incor- 
rect, and  any  conclusion  drawn  from  these  statistics  would  be  erroneous,  for  the  following  reasons : 
1.     The  European  statistics  are  heavily  "padded"   in  the   following  way:     Most  of  the 
countries  of  Euroj^e  are  small  in  area,  so  that  a  very  considerable  amount  of  telegraph  traffic  is 
international ;  but,  in  the  statistics  Mr.  Lewis  has  used,   an   international   message   is   necessarily 
counted  at  least  twice — once  in  the  country  where  the  message  originates  and  once  in  the  country 
where  it  terminates;  and  if  messages  pass  through  one  or  more  countries,  they  are  also  counted 
in  each  country  through  which  they  pass.     For  countries  similarly  situated   or  of  similar  size, 
this  method  of  counting  may  be  satisfactory  in  comparing  one  with  the  other;  but  this  certainly 
does  not  hold  as  to  comparisons  with  the  United  States. 

For  purposes  of  comparing  the  development  of  telegraph  traffic,  it  is  fairly  clear  that  only 
originating  paid  messages  should  be  used  (collect  luessages  not  being  allowed  in  Europe),  since 
the  commercial  messages  originating  in  each  country  indicate  the  extent  to  which  the  public  uses 
the  telegraph  service.  The  following  statistics  show  to  what  extent  Mr.  Lewis'  traffic  statistics 
are  erroneous  for  comparative  purposes: 

Per  Cent,  of  Originating 
Domestic  and   International         Per  Cent,  of  Du- 
Commercial  Telegrams  to         plication  in  Mr. 
Country.  Total  Telegrams  Reported.'"      Lewis'  Statistics  t 

Luxemburg    -50  100 

France*    y^  37 

Norway   50  100 

Belgium!     26 

Netherlands    65  54 

Sweden    56  78 

Great  Britainf  89  12 

Switzerland    49  104 

Germany    76  32 

Italy    75  33 

Denmark   45  120 

Austria 60  67 

Hungary    Ti  37 

*Not   including  pneumatic   tube  messages,   which    Mr.    Lewis    has    included,    amounting    to 
10,000,000.'" 

•Based  on  a  total  which  includes  a  large  number  of  railroad  service  messages  properly  not 
included  by  Mr.  Lewis. 

tMr.  Lewis'  statistics  for  Great  Britain  include  messages  passing  exclusively  over  the  lines  of 
cable  companies.'" 

JThis  is  the  percentage  of  the  amount  of  traffic,  improperly  included  in  Mr.  Lewis'  statistics, 


21 

The  facts  shown  above  indicate  that  Mr.  Lewis'  European  traffic  statistics  are  from  12^ 
to  more  than  100^  in  excess  of  those  which  should  have  been  used  in  comparing  the  telegraph 
traffic  development  of  the  European  countries  with  that  of  the  United  States. 

2.  Mr.  Lewis  insists  that  the  mail,  telegraph,  and  telephone  services  are  more  or  less  in- 
terdependent;  and  it  has  been  indicated  hereinbefore  that  the  short  haul  telegraph  service  has 
been  supplanted  in  the  United  States  by  telephone  service.  Mr.  Lewis,  moreover,  admits  that  in 
Europe  the  telephone  was  taken  over  by  the  government  largely  to  protect  the  telegraph  reve- 
nues,"°  which  can  only  be  understood  as  indicating  tliat  the  original  policy  was  to  restrict  the  tele- 
jjhone  so  far  as  necessary  to  prevent  loss  in  telegraph  traffic.  That  this  has  been  the  case  is  shown 
rather  clearly  by  the  fact  that  in  Luxemburg,  which  has  a  ma.viinutn  haul  of  only  50  miles,  about 
20%  of  the  total  originating  commercial  telegraph  messages  are  domestic,*"  and,  therefore,  of 
the  character  which  in  this  country  are  ordinarily  sent  by  telephone.  Hence,  no  comparison  of 
telegraph  traffic  development  is,  in  itself,  significant  unless  accompanied  by  telephone  traffic  de- 
velopment statistics;  apd.  to  be  fully  significant,  mail  development  (first-class)  should  also  be 
included.  For  these  reasons,  mail  and  telephone  traffic  development  statistics  are  shown,  together 
with  the  telegraph  traffic  statistics,  in  the  following  table: 

FIRST-CL.'\.SS  MAIL,  TELEGRAPH,  AND  TELEPHONE  TRAFFIC  PER  INHABITANT, 

YEAR  1912. 


Country 


Population  in 
Thousands."" 


Traffic  per  Inhabitant. 


Mail." 


I  Telegrams' 


Telephone.*"     (      Total. 


Austria   

Belgium    

Denmark    .... 
France   (1911) 

Germany    

Great   Britain 

Hungary 

Italy     

Lu.xcmburg    . . 
Netherlands  . . 

Norway 

Sweden   

Switzerland   . . , 
United  States 


29,056 

7.570 

2,790 

39.601 

66.640 

46,122 

21,213 

34.890 

265 

6,078 

2  422 

5;604 

3,841 

96.299 


56.5 
50.8 
58.7 

43.5  (1912) 
81.8 
91.0'= 
28.5 
21.6 
82.6 
49.3 
39.6 
35.6 
98.1 
106.0'" 


.50 
.82 
.62 

1.15 
.75 

1.77'= 
.48 
.63 
.57 
.76 

1.23 
.49 
.83 

1.05* 


12.55*= 
18.23 
81.24 
8.36 
34.89 
23.81 
9.59 
9.93 
18.45" 
27.92 
70.00 
77  47 
17.85'* 
161.99 


69.55 

69.85 

140.56 

53.01 

117.44 

116.58 

38.57 

32.16 

101.62 

77.98 

110.83 

113.56 

1 16.78 

269.04 


Telegraph  messages  do  not  include  inward  international  messages;  transit  international  mes- 
sages; or  service  messages.  Ten  per  cent,  deducted  from  American  telegraph  statistics  to  avoid 
duplications. 

♦Estimated  for  all  telegraph  companies  in  tlie  United  States,  less  10  per  cent,  to  compensate 
for  duplicatipns  and  errors. 

The  following  table  shows  the  rank  of  each   country  as  to  mail,   telegraph,   and   telephone 
traffic  development  on  the  basis  of  the  above  statistics : — 


Country. 

Austria    

Belgium    

Denmark   

I'rancc    

Germany 

Great  Britain   

Hungary    

Italy    

Luxemburg  

Netherlands    

Norway    

Sweden  

Switzerland 

United    States   


Mail  I    Telegraph 

Development     Development 
Rank         I       Rank 


7 

8 

6 

10 

5 

3 

13 

14 

4 

9 

11 

12 

2 

1 


12 
6 

10 
3 
8 
1 

14 
9 

11 
7 
2 

13 
5 
4 


Telephone 

Total 

Development 

DevclopmenI 

Rank 

Rank 

11 

10 

9 

11 

2 

■> 

14 

12 

5 

3 

7 

5 

13 

13 

12 

14 

8 

8 

6 

9 

4 

7 

3 

6 

10 

4 

1 

1 

22 

From  these  tables  the  following  facts,  pertinent  to  a  comparison  of  the  telegraph  develop- 
ment of  the  United  States  and  Europe,  may  be  noted: 

The  United  States  ranks  fourth  as  to  telegraph  development  in  the  face  of  the  highest 
mail  and  telephone  traffic  development  in  the  world ;  and  is  exceeded  only  by  Great  Britain, 
which  has  but  15Cc  of  the  telephone  development  and  only  43%  of  the  total  communications  de- 
velopment of  the  United  States ;  by  Norway,  which  has  but  43%  of  the  telephone  development 
and  only  41%  of  the  total  communications  development  of  the  United  States;  and  by  France, 
which  has  but  5%  of  the  telephone  development  and  less  than  20%  of  the  total  communications 
development  of  the  United  States. 

Telephone  traffic  statistics  are  not  published  or  compiled  by  the  New  Zealand  and  Aus- 
tralian governments,  but  the  telegraph  develo|)mciit  in  New  Zealand  is  probably  high  because  of 
the  very  low  rate  which  produces  a  heavy  deficit,  as  stated  hereinbefore,  and  because  of  the  very 
low  development  in  telephone  toll  traffic,  as  shown  on  page  51.  The  development  in  telegraph 
traffic  is  without  question  due  to  special  factors,  since  in  .\ustralia,  which  is  similar  in  character 
and  which  also  has  deficit  producing  telegraph  rates,  the  telegraph  development  is  only  30%  of 
that  in  New  Zealand.'^' 

Assumption  that  Telegraph  Facilities  in  the  United  States  are  Relatively  Inadequate. 

With   reference  to  the  assumed   inadequacy  of  private  telegraph  facilities,   Mr.  Lewis  quotes 
the  following  statistics : 

MR.  LtSWIS'  TABLE  NO.  7. 


Country. 


Luxemburg 

France  

Belgium  

Netherlands    . . 
New  Zealand.  . 

Germany    

Hungary    

Sweden    

Italy    

Great    Britain. 

Japan    

Switzerland    . . 

Russia    

Norway    

.\ustria    

Denmark   

United  States* 


Number  of 

telegraph 

offices  to 

number  of 

post  offices. 


1  to  0.04 
1  to  0.07 
1  to  1.0 
1  to  1.1 
1  to  1.2 
1  to  1.1 
1  to  1.3 
1  to  14 
1  to  1.5 
1  to  1.7 
1  to  1.8 
I  to  1.8 
1  to  2.0 
1  to  2.2 
1  to  2.2 
1  to  3.0 
1  to  7.7 


♦Commercial  offices,  maintained  by  the  companies. 
in  connection  with  which  he  makes  the  following  statement: 


"INADEQU.ACY  OF  EXTENSION." 

"It  has  been  suggested  that  substantially  the  entire 
capital  and  current  expenditures  of  the  rival  telegraph 
company  is  wasted  with  reference  to  competitive  territory. 
The  antonym  of  this  condition  is  the  absence  of  any  tele- 
graphic service  at  points  which  are  unattractive  to  private 
finance.  There  are  64,022  post  offices  and  branches  in  the 
United  States  and  but  6,828  (1907)  offices  maintained  by 
the  telegraph  companies  themselves,  although  they  treat 
some  22,282  railway-signal  stations  as  telegraph  offices. 
Converting  the  railway  telegraph  into  phone  signaling  is 
reducing  this  rather  doubtful  claim  for  proper  geographical 
distribution  of  the  telegraph  service,  where,  with  the  rail- 
way business  having  necessary  precedence  and  amounting 
to  double  that  of  the  commercial  companies,  the  citizen's 
message,  even  where  service  was  given,  came  as  a  third 
and  last  attention.  These  telegraph  offices  are  maintained 
by  the  railways  at  their  own  expense  and   for  their  own 


2.3 


purposes,  and  would  be  quite  as  available  for  the  postal 
administration  as  they  are  now  to  the  telegraph  companies. 
They  can  hardly  be  claimed  as  belonging  to  the  service 
rendered  by  the  telegraph  companies  proper.  And  while 
we  are  on  the  subject  of  giving  the  public  the  "advantages 
of  public  ownership,  without  the  manifest  disadvantages," 
a  comparison  of  the  service  rendered  under  postal  ad- 
ministration elsewhere  and  private  financiering  here  may 
be  of  interest." 

This  Statement  and   its  associated  statistics  are  directly  misleading  and  absolutely  erroneous 
for   the    following   reasons: 

1.  Mr.  Lewis  has  included  all  classes  of  telegraph  offices  for  foreign  countries,  but  has  ex- 
cluded railroad  and  telephone  telegraph  offices  for  the  United  States.  The  percentage  of  rail- 
road telegraph  offices  to  total  telegraph  offices  in  some  countries  is  greater  than  in  the  United 
States,  as  shown  by  the  following  table: — 


Country. 


7o   of   Railway  Telegraph   Offices 

(for  commercial  business) 

to   Total   Telegraph   Offices 

1912. 


Germany'^    

Austria'*"   

Belgium"    

Denmark"" 

Hungary""  

Italy" 

Norway"* 

Great  Britain'" 

Netherlands"*    

Sweden" 

Switzerland'"  

Russia'"  

France*" 

Western   Union,  about 


13 
33. 

2 
68 
48 
24 
26 
60 

3 
17 
21 
49 
16 
53  (Nov.  30.  1913) 


It  appears  from  the  above  lliat  the  European  governments  use  railway  offices  very  largely 
for  telegraph  purposes,  althou,L(h  the  density  of  population  in  most  cases  is  nuich  greater  than  in 
this  country;  and  that  in  Denmark,  Sweden,  Russia  and  Ilungarj',  the  percentage  of  railway  of- 
fices exceeds  or  approaches  the  Western  Union  percentage. 


2.  Mr.  Lewis  has  excluded  the  various  telephone  offices  used  for  telegraph  purposes  for  the 
United  States,  but  has  included  such  offices  for  foreign  countries.  Statistics  concerning  such 
offices  are  generally  not  published  by  the  foreign  governments,  but  the  facts  which  follow  con- 
cerning New  Zealand  illustrate  the  unfairness  in  Mr.  Lewis'  statistics,  which  cover  only  directly 
operated  Morse  offices  in  the  United  States.  The  Annual  Report  of  the  New  Zealand  Administra- 
tion for  1910  states,  as  to  total  telegraph  offices:  "Of  these,  300  were  telegraph  offices  and  1,663 
were  tclei)hone  offices."'"  Probably  this  means  that  only  300  were  Morse  operated  offices'"  (the 
only  kind  Mr.  Lewis  has  used  for  the  United  States). 

3.  In  eliminating  all  offices  except  directly  operated  Morse  offices  for  the  United  Slates,  Mr. 
Lewis  infers  that  the  service  from  the  offices  excluded  is  inferior.  The  facts  concerning  delays 
in  transmission  in  various  types  of  foreign  telegraph  offices  are  not  available ;  but  so  far  as  the 
adequacy  of  facilities  to  the  public  is  concerned,  the  length  of  hours  of  telegraph  offices  is  a  very 
significant  factor  which  Mr.  Lewis  has  overlooked;  and  one  as  to  which  the  following  statistics 
are  pertinent,  as  showing  that  the  telegraph  companies  give  a  more  complete  .service  than  the 
governments : — 


24 


German  Empire"* 

Austria*"*   

Belgium" 

Great   Britain"*" 

Norway"  

France   (1911)"" 

Hungary'** 

Netherlands"    

Sweden"    

Switzerland"    

New  Zealand    (1910)' 
Australia  (1911)'".... 


Per  Cent,  of  Total  Offices,  1912— 


Open 

Complete  or  Prolonged 

Limited 

Day  and  Night. 

Day  Service. 

Day  Service. 

1.3% 

17.87o 

80.99fc 

1.2 

8.4 

90.4 

1.0 

26.0 

730 

1.5 

3.5 

95.0 

.3 

10.0 

89.7 

.1 

5.3 

94.6 

1.2 

14.1 

84.7 

.7 

169 

82.4 

1.6 

AXO 

55.4 

.3 

19.4 

80.3 

0.0 

9S.0t 

5.0 

2 

50.0 

49.8 

Western  L'nion  Company""; 

Open    day   and    night 19.3% 

Open  midnight  or  later 5.9 

Open  until  from  10  p.m.  to  12  midnight  6.4 
Western  Union  offices  open  later  than 

10  pm 31.6 


'Covers  government  offices  only. 

tThis  percentage  should  be  read  in  the  light  of  tlic  statistics  as  to  hours  of  telephone  opera- 
tion in  New  Zealand,  page  29. 

Tlie  term  "Complete  or  Prolonged  Day  Service"  is  not  defined  in  the  "Journal  Telc- 
graphiqiie,"  from  which  the  above  statistics  for  foreign  countries  are  derived ;  but,  in  general, 
"Complete  or  Prolonged  Day  Service"  does  not  extend  beyond  10  o'clock  p.m.  Most  of  the  Tele- 
graph Administrations  do  not  give,  in  their  annual  reports,  statistics  as  to  the  hours  of  service 
of  their  telegraph  offices.  In  the  case  of  Switzerland,  however,  full  information  of  this  character 
is  given,  and  will  serve  to  indicate  the  significance  of  the  comparison  shown  above. 


TELEGRAPH   OFFICES— SWITZERLAND,    1912.*' 

No.  of  Offices  with    Continuous    Service 6 

No.  of  Offices  Open  until  10  p.m 17 

No.  of  Offices  Open  until  9  p.m 359 

No.  of  Offices  Open  from  7  or  8  a.m.  until  12  m.,  and  from  1  p.m.  to  8;30  p.m 84 

No.  of  Offices  Open  from  7  or  8  a.m.  until  12  m.  and  from  2  p.m.  to  6  p.m.,  and  from  8  p.m. 

to  8 :30  p.m 1,908 

Total 2,374 

From  these  statistics  it  appears  that  the  Western  Union  Company: 

a.  Has  a  very  much  higher  proportion  of  all-night  offices  than  any  government. 

b.  Has,  in  proportion,  a  greater  number  of  all  night  offices  only,  than  the  all-night  and 
"complete  or  prolonged  day"  offices,  combined,  in  either  Austria,  Great  P.ritain,  Norway, 
France,   Germany,    Hungary,  or  The  Netherlands. 

4.  The  above  is  significant  on  the  assumption  that  the  number  of  telegraph  offices  in 
the  United  States  is  relatively  as  great  as  in  Europe.  This  Mr.  Lewis  disputes  on  the  basis  of 
statistics  which  exclude  all  but  directly  operated  offices  in  the  United  States,  which,  as  has  been 
shown,  should  be  included. 

Mr.  Lewis,  however,  believes  that  the  assumed  inadequacy  of  telegraph  facilities  in  the 
United  States  is  attributable  to  the  lack  of  the  "public  service  motive."  In  this  connection  it 
is  pertinent  to  note  that  in  Great  Britain,  at  least,  many  Post  Office  telegraph  offices  are  main- 
tained by  local  community  or  personal  guarantees,  "under  which  the  guarantors  agree  for  a  term 
of  seven  years  to  pay  one-third  of  any  sum  whereby  the  telegraph  recipts  may  fall  short  of  the 
annual  cost  of  maintenance."  The  latest  statistics  indicate  that  there  were  900  such  offices  in 
Great  Britain  in  1913,  and  that  65%  of  the  telegraph  offices  added  during  the  year  were  opened  on 
this  basis.'"     A  similar  practice  is  in  effect  in  Switzerland."" 


25 

5. .  As  is  shown  above,  Mr.  Lewis  should  have  included  all  telegraph  oflfices  in  the  United 
States,  regardless  of  the  method  of  operation  or  the  financial  basis  on  which  tliey  are  conducted. 
Mr.  Lewis  states  the  number  of  post  offices  and  branches  as  64,022,  and,  although  this  includes 
post  offices  in  Alaska,  Hawaii,  etc.,  where  the  American  land  line  companies  do  not  operate,  this 
figure  may  be  used.  The  number  of  Western  Union  Offices  on  October  31,  1913,  was  36,491. 
Estimating  the  number  of  telegraph  offices  of  other  telegraph  companies  at  5,000,  there  are,  say, 
42,000  telegraph  offices  in  the  United  States;  or  1  telegraph  office  to  L52  post  offices,  against  1 
telegraph  office  to  7.7  post  offices,  according  to  Mr.  Lewis.  The  fact  is  that,  in  relation  to  post 
offices,  there  are  more  telegraph  offices  in  the  United  States  than  in  Great  Britain,  Japan,  Swit- 
zerland, Russia,  Norway,  Austria,  Denmark,  or  Australia  (the  latter  is  1  to  L8;  not  shown  by 
Mr.   Lewis'"). 

From  the  above  it  is  clear  that,  in  spite  of  the  area  covered  and  the  high  development 
of  telephone  facilities  in  the  United  States,  its  telegraph  facilities  are  not  restricted ;  and  are,  in 
fact,  better  than  in  many  of  the  most  important  countries  referred  to  by  Mr.  Lewis. 


Summary  as  to  Telegraphs. 

Mr.  Lewis'  propositions  concerning  telegraphs  were:  that  the  institutional  efficiency  of  private 
telegraph  systems  was  relatively  low ;  that  their  rales  were  relatively  liigli ;  and  that  the  develop- 
ment of  their  service  was  relatively  low.  These  propositions  he  attempted  to  prove  by  various 
assumptions  which  were  erroneous.  In  rebutting  his  assumptions  and  conclusions,  it  has  been 
shown : 

1.  That  high  efficiency  in  the  United  States  Post  Office  has  not  been  demonstrated. 

2.  That  the  efficiency  of  the  private  telegraph  organizations  is  not  relatively  low,  but  rela- 
tively high. 

3.  That  the  theoretical  savings  in  routine  operations  under  postalization  could  be  secured 
only  by  curtailment  of  service. 

4.  That  the  theoretical  savings  in  administration  of  telegraphs  under  postalization  could 
not  be  effected,  and  are  not  effected  when  governments  operate  the  telegraph. 

5.  That  the  theoretical  savings  in  rent  umlcr  postalization  are  small  and  doubtful  of  actual 
accomplishment  in  practice. 

6.  That  rates  of  private  companies  arc  not  high  as  compared  with  domestic  foreign  rates 
as  a  whole  for  similar  sersice. 

7.  That  rates  of  private  companies  are    lower    than    those    of    governments    for    similar 
service  on  international  lines. 

8.  That  i)rivate  companies  have  reduced  their  rates  considerably  during  recent  years,  a 
fact  which  escaped  Mr.  Lewis'  observation. 

9.  That  government   rates,   though  not  lower  than  private  rates,  result  in  heavy  deficits. 

10.  That  the  telegraph  traffic   development  in  the  United  States  is  high,  and,  in  view  of 
the  great  telephone  development   in  the  United  States,  is  exceedingly  high. 

IL     That  the  facilities  for  telegraph  service  are  not  poor  in  the  United  States,  but,  length 
of  hours  of  offices  considered,  are  probably  the  most  adequate  in  the  world. 


II.     TELEPHONES. 

Mr.  Lewis'  discussion  of  telephones  is  directed  to  the  proof  of  three  propositions:  (A) 
the  relative  inefficiency  of  private  telephone  operation;  (R)  the  relatively  high  prices  of  private  tele- 
phone service;  and  (C)  the  social  inefficiency  or  inadequacy  of  private  telephone  systems;  and  his 
statistics  and  arguments  will  be  anaylzed  under  these  headings. 


26 


A.     AS     TO     THE     RELATIVE     INEFFICIENCY    OF     PRIVATE     TELEPHONE     SYSTEMS. 

Mr.    Lewis'    only    support    of    his    assumption  of  low  institutional  efficiency  of  the  Bell  Com- 
panies is  the  following  table: 

MR.  LEWIS'  TABLE  NO.  8. 
Telephone   operalifc   efficiency. 


Country. 

Norway   

Russia    

Belgium   

Netherlands  (municipal) 

Sweden  

Denmark  (private)  

Italy    

Netherlands  (private) 

United  States   (Bell  Co.) 

Norway   (private)    

Switzerland  

Netherlands  (State) 

France    

Luxemburg 

Denmark   

Germany    

Austria 

New  Zealand 

Great  Britain 

Hungary    

Japan    


Phone  calls  per 

employee  per 

annum. 


146, 
114, 
98, 
9. 
79, 
79, 
67, 
65, 
58, 
50, 
47 
38, 
34 


854 
659 
715 
.251 
142 
000 
727 
181 
134 
751 
.328 
,912 
018 


Rank 


1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 


Postal  units  per 

employee  per 

annum. 


32,414 

85,819 

35",837 

42,947 

60,65  i 

37,562 
53.621 
33.097 
40.321 
38,930 
37.236 
30,528 
28,696 
26,056 
23,025 
21.820 


Rank. 


The  fallacy  of  conclusions  drawn  from  these  statistics  is  indicated  by  the  analysis  of  Mr. 
Lewis'  Tables  No.  1,  2,  and  3,  hereinbefore,  in  the  discussion  of  which  it  is  shown  that  the  statistics 
of  postal  efficiency  are  not  correct;  so  that,  so  far  as  Mr.  Lewis  draws  conclusions  from  the  as- 
sumed  rank  as  to  postal   efficiency,    such   conclusions  are  unsound. 

In  general,  the  discussion  of  Mr.  Lewis'  statistics  as  to  postal  and  telegraph  efficiency  cover 
his  similar  statistics  as  to  telephone  efficiency.  However,  the  statistics  of  telephone  efficiency  are 
erroneous    for   the    following   additional   reasons: 

1.  Mr.  Lewis  apparently  derived  his  statistics  of  telephone  efficiency  from  the  "Journal 
Telegraphique."  A  study  of  the  data  which  he  used  shows  that  he  neglected  the  fact  that  the 
figures  on  the  "total  number  of  employees''  given  in  that  source  arc  generally  qualified  in  explan- 
atory notes  (see  page  7),  and  that  those  qualifications  render  the  figures  absolutely  unsuit- 
able for  Mr.  Lewis'  purpose ;  for  to  show  "telephone  operative  efficiency,"  the  whole  number  of 
telephone  employees  must  be  considered,  as  Mr.  Lewis  admits  by  his  assertion  that  "all  kinds  of 
employees  of  the  telephone  and  post  are  included  in  the  statement." 

The   following  are  the  facts  concerning  Mr.  Lewis'  errors  in  this  respect:'*' 

Norway — State  System.  The  long  distance  staff  is  largely  joint  telephone-telegraph. 
Statistics  used  by  Mr.  Lewis  include  only  exclusii-ely  telephone  employees;  and  hence  also  do  not 
include  executive  officers  and  staflfs. 

Belgium.  Joint  telephone-telegraph  employees  are  not  included  in  the  statistics  used  by 
Mr.  Lewis  (see  also  page  7). 

Sweden.  The  statistics  used  by  Mr.  Lewis  exclude  all  telephone  plant  employees,  account- 
ing employees  and  all  employees  of  the  executive  department. 

Switzerland.  The  statistics  used  by  Mr.  Lewis  exclude  24  apprentice  operators,  CA7  op- 
erators who  have  other  work  in  addition  to  telephone  duties,  and  222  auxiliary  operators. 


27 

France.  Mr.  Lewis'  statistics  include  only  such  employees  as  devote  tlieir  entire  time  to 
telephone  work. 

Italv.  The  actual  computation  for  Italy,  from  statistics  in  the  "Journal  Telegraphique," 
gives  an  efficiency  of  38,490  calls  per  employee  ( 1910)  as  against  67,727  per  employee  quoted  by 
Mr.  Lewis. 

Netherlands.     The  statistics  used  by  Mr.  Lewis  include  operators  only. 

Bell  Companies.  The  efficiency  of  the  Bell  organization,  including  all  employees,  and 
equated  by  Mr.  Lewis'  method,  was  72,000  calls  per  employee  in  1912,  as  against  58,134  quoted  by 
Mr.  Lewis.* 

It  will  be  apparent  from  the  above,  even  assuming  that  Mr.  Lewis'  method  and  his  data  as  to 
traffic  are  correct,  that  the  "telephone  operative  efficiency"  of  the  foreign  countries  named  above 
is  far  below  that  shown  in  Table  No.  8. 

2.  Mr.  Lewis'  statistics  of  conversations  are  widely  in  error,  due  to  his  assumption  that 
one  toll  or  long  distance  conversation  is  equal  to  four  local  conversations.  No  broad  equation 
of  toll  traffic  in  this  manner  is  possible.  For  example:  The  amount  of  operating  work  in- 
volved in  a  long  haul  toll  conversation  is  ordinarily  much  greater  than  for  a  short  haul  toll 
message.  Again,  the  amount  of  labor  involved  depends  upon  whether  there  is  a  direct  circuit 
between  the  terminating  points,  or  whether  it  is  necessary  to  engage  the  time  of  several  operators 
in  "building  up"  the  circuit  desired.  Moreover,  there  is  a  very  great  difference  in  the  kinds  of 
toll  calls.  In  the  case  of  one  class  of  toll  calls,  known  as  "particular  person"  calls,  the  calling  sub- 
.scriber  asks  to  be  connected  with  a  particular  person  at  the  distant  point,  in  which  case  the  operators 
not  only  have  to  obtain  the  telephone  at  which  the  called  subscriber  will  presumably  talk,  but  also 
to  secure  the  particular  person  desired  before  the  conversation  can  begin.  In  the  case  of  a 
second  class  of  toll  calls,  generally  known  as  "two-number"  calls,  the  calling  subscriber  asks  to 
be  connected  with  a  specified  telephone,  and  if  a  particular  person  is  desired,  must  himself 
secure  the  person  after  the  connection  is  established,  or,  if  the  person  is  not  there,  must  give  his 
instructions  to  whoever  answers   at  that  telephone. 

In  Europe  generally  the  two-number  system  only  is  used,  so  that  the  operators  perform 
merely  tlie  functions  of  establishing  a  connection  with  the  called  telephone.  In  the  United  States 
the  particular  person  type  of  toll  service  is  usually  given,  so  that  the  function  of  the  operators  is 
not  merely  to  establish  a  connection  between  two  telephones,  but  to  secure  for  the  calling  sub- 
scriber a  particular  person.  That  this  class  of  calls  is  more  expensive  to  handle  is  evident  from 
the  fact  that  a  special  charge  is  made  for  this  type  of  service  in  at  least  Denmark'*',  Norway"', 
and  Sweden'". 

For  these  reasons  an  average  "toll"  call  cannot  even  be  approximately  equivalent  in  dif- 
ferent countries. 

3.  There  is  a  serious  duplication  in  the  counting  of  toll  conversations  in  the  European 
statistics.  This  is  due  in  two  causes:  (a)  tlic  method  of  counting  international  messages;  and 
(b)  the  practice  of  counting  as  a  separate  conversation  each  rate  unit  of  time  (usually  three 
minutes)  or  fraction  thereof  used  in  a  conversation. 

(a)  The  reasons  for  the  duplication  in  counting  international  telegraph  messages 
arc  given  hereinbefore,  in  connection  with  the  discussion  of  telegraph  rates  and  telegraph 
traffic  (lcvck)])mcnt  (sec  pages  15,  20).  A  similar  duplication  necessarily  exists  as  to  inter- 
national telephone  traffic,  each  conversation  being  counted  as  one  or  more  messages  in  the 
country  in  whicli  the  message  originates,  the  country  in  which  it  terminates,  and,  in  some 
cases,  the  country  through  which  it  passes.  In  the  case  of  telegraph  messages,  this  dupli- 
cation is  very  apparent  in  Mr.  Lewis'  source,  the  "Journal  Telegraphique,"  since  such  mes- 
sages are  classified  as  "international  outward,"  "international  inward,"  and  "international 
transit."  In  the  case  of  telephone  messages,  how'evcr,  this  duplicntion  is  not  apparent  except 
by  tracing  the  statistics  beyond  the  source  which  Mr.  Lewis  has  used.     For  example: 

♦However,  Mr.  Lewis  also  quoted  the  fig^iire  65,287,  in  another  connection. 


28 

The  figure  for  interurban  conversations  given  in  the  "Journal  Telegraphique"  for 
Belgium  is  1,816,793'*=  (1910).  This  agrees  with  the  statistics  given  in  the  Annual  Report 
of  the  Belgian  Telegraph  Administration,  where  it  is  shown,  however,  tiiat  this  total  includes 
464,044    international    messages    including  both  incoming  and  outgoing  messages.^" 

It  will  be  apparent  that  the  amount  of  this  duplication  in  most  European  countries  is 
considerable,  as  in  the  case  of  telegraph  messages ;  and  that  it  results  in  a  very  serious  infla- 
tion of  the  "units"  per  employee  in  Mr.  Lewis'  "efficiency"  statistics,  where  a  single  toll  con- 
versation is  counted  as  four  "units." 

ibl  In  most  countries  the  unit  period  of  toll  conversation  is,  as  Mr.  Lewis  shows, 
three  minutes.  In  most  European  countries,  however,  each  three  miinites  or  fraction  thereof 
of  an  actual  conversation  is  counted,  for  statistical  purposes,  as  a  separate  conversation. 
This  is  not  the  American  practice,  so  that  Mr.  Lewis'  statistics  for  foreign  countries  are 
again  inflated.  This  statement  needs  no  further  substantiation  than  a  (luuialion  from  the 
instructions  of  the  International  Telegraph  Bureau,  accompanying  the  form  on  which  the 
statistical  returns  are  made  by  the  various  governments  for  publication  in  the  "Journal  Tele- 
graphique."    The  instruction  is  as  follow  : — 

(Translation)  "Each  interurban  conversation  is  counted  as  a  unit,  independently 
of  the  number  of  central  offices  through  which  it  passes,  if  it  is  completed  within  the 
unit  period  of  time  authorized  under  the  rate  system  used.  If  it  (the  conversation)  ex- 
tends beyond  this  period,  it  is  counted  as  many  times  as  there  are  rate  periods.'"** 

In  the  United  States  from  25%  to  more  than  50%  ot  the  toll  conversations  extend 
beyond  three  minutes,  and  from  3%  to  10%  extend  beyond  six  minutes,  varying  with  the 
length  of  haul ;  but  each  message,  regardless  of  duration,  is  counted  as  one  message.  This 
indicates  how  serious  the  duplication  in  the  European  method  of  counting  is,  in  comparisons 
with  toll  traffic  in  the  United  States.  In  Sweden  the  number  of  rate  units  used  is  31%  higher 
than  the  number  of  actual  conversations.'*' 

4.  The  term  "phone  call."  used  by  Mr.  Lewis,  is  not  defined.  The  statistics  for  the  Bell 
System  cover  completed  conversations  or  messages  only ;  but  it  is  possible  that  those  for  foreign 
countries  include  attempted  calls,  since  the  record  of  completed  conversations  is  obtained  only  by 
deducting  from  this  total  of  calls,  completed  and  attempted,  the  percentage,  determined  by  careful 
observations,  of  calls  not  completed  because:  (a)  the  called  subscriber  does  not  answer;  (b)  the 
called  subscriber's  line  is  busy;  etc.*  Hence,  the  statistics  for  the  Bell  System  are  compiled 
under  the  most  restrictive  definition — in  fact,  a  much  broader  definition  is  used  for  routine  admin- 
istrative purposes  in  determining  the  efficiency  of  operation.  The  significance  of  this  state- 
ment is  indicated  by  the  fact  that  the  Census  Bureau  in  quoting  statistics  of  telephone  con- 
versations in  the  United  States  for  1912  (in  published  advance  sheets)  states  in  a  note  that 
those  for  the  Bell  Companies  include  only  completed  conversations  whereas  those  for  other  com- 
panies probably  include  uncompleted  conversations  in  addition.  In  view  of  these  facts,  and 
in  the  absence  of  specific  information  to  the  contrary,  it  is  pertinent  to  question  whether  or  not 
the  foreign  statistics  are  comparable  with  those  used  for  the  Bell  System. 

In  central  oflSces  in  exchanges  having  more  than  one  central  office,  calls  must  be  classified, 
to  determine  the  efficiency  of  each  central  office,  into  outward  or  originating  calls,  and  into  termi- 
nating or  inward  calls,  since  a  large  proportion  of  the  calls  pass  from  a  subscriber  in  one  central 
office  to  a  subscriber  in  another  central  office,  thereby  requiring  the  attention  of  operators  in  both 
central  offices.  The  Bell  statistics  include  outgoing  completed  messages  only,  regardless  of  the 
number  of  central  offices  involved.  It  is  probable  that  the  foreign  statistics  include  originating  calls 
and  inward  trunked  calls,t  especially  as  the  International  Telegraph  Bureau  has  found  it  necessary 
in  giving  instructions,  concerning  the  compilation  of  statistics  of  interurban  conversations, 
specifically  to  state  that  the  number  of  central  offices  through  which  the  calls  pass  should  not 
be  considered  in  counting  messages. 

*This  refers  to  total  calls  of  an  exchange.  Completed  conversations  for  individual  subscribers  under 
message  rates  are  determined  by  registers  or  by  making  tickets.  . 

tThe  duplication  is  of  course  similar  to  that  encountered  in  the  foreign  method  of  countmg  international 
messages. 


29 

5.  Mr.  Lewis'  assumption,  that  a  local  call  is  the  same  in  all  countries,  is  unwarranted. 
In  addition  to  differences  due  to  various  types  of  equipment  and  methods  of  operating,  an  impor- 
tant difference  relates  to  the  number  of  calls  which  are  trunked.  This  chiefly  depends  upon  the 
number  of  central  offices  in  the  exchange  area.  Calls  which  must  be  passed  from  one  central  office 
to  another  require  the  services  of  two  operators.  Due  to  the  very  high  development  in  the 
United  States,  especially  in  the  large  cities,  it  is  probable  that  the  percentage  of  calls  trunked 
is  much  higher  in  the  United  States  than  in  Europe. 

Another  difference  in  the  labor  value  of  local  conversations  relates  to  the  hours  of  service. 
It  is  a  general  practice  in  the  United  States  to  give  service  during  all  hours  day  and  night,  and 
on  all  days.  This  means  that  a  considerable  number  of  employees  must  be  provided  during  late 
night  hours  largely  for  occasional  and  emergency  service,  and  that  these  employees  handle  rel- 
atively few  calls.  Under  the  government  systems  very  few  exchanges  have  night  service,  so  that, 
other  things  being  equal,  the  operative  efficiency  would  tend  to  be  less,  on  the  basis  of  Mr. 
Lewis'  statistics,  in  the  United  States  than  in  foreign  countries.  Hence,  Mr.  Lewis'  statistics,  in 
effect,  tend  to  penalize  the  Bell  Companies  for  their  much  more  complete  public  service.  That 
this  factor  is  one  of  great  i:nportance.  not  only  as  affecting  "operative  efficiency,"  but  as  regards 
utility  of  service  to  the  public,  is  indicated  by  the  following  statistics  concerning  the  hours  of  tele- 
phone operation  in  several  foreign  countries : — 


SWITZERLAND.' 


Hours  of  Service. 

%of 
Total  Offices. 

With  continuous  service 

. .     ■      .             

3.5 
42.0 

8.0 
46.5 

From  6  a.m.  to  9  p.m 

From  7  a.m.  to  noon,  and  from  1  p.m.  to  8:30  p.m 

From  7  a.m.  to  noon,  and  from  2  p.m.  to  6  p.m.,  and 

from  8  p.m. 

to  8:30  p.m 

100.0 

NEW  ZEALAND." 


Hours  of  Service. 


7oof 
Total  Offices. 


With  continuous  service  (week  days) 

Open  later  than   5  p.m.,  but  not  after  midnight. 
Open  from  9  a.m.  to  5  p.m.  only 


Open  more  than  two  hours  on  Sunday. 
Open  two  hours  or  less  on  Sunday... 
Not  open  on  Sunday 


Not  open  holidays. 


6J 

34.1 

59.6 

100.0 

7.4 

79 

84.7 

100.0 
80.0 


Sweden. 

There  are  only  75  central  offices,  in  2,064  central  offices  and  switching  stations,  giving  day 
and  night  service;  and  in  many  of  the  exchanges  where  all-night  service  is  given,  a  special  message 
charge   is   required   for  each  conversation  during  night  hours."" 


Belgium. 

In  what  is  known  as  the  "Brussels  Group,"  which  consists  of  the  city  of  Brussels  and  en- 
virons, and  which  has  over  one-third  of  the  tcKphones  in  the  entire  country,  there  are  23  central 
offices,  of  which  only  two  are  operated  day  and  night.  Of  the  remainder,  19  are  open  only  from 
7  a.  ni.  to  9  p  in.,  one  is  open  until  8  p.  m.,  and  one  until  7  p.  m.  Those  which  are  open  all  night 
are  offices  within  the  city  of  Brussels."' 

The  above  facts  indicate,  very  clearly,  not  only  that  Mr.  Lewis'  statistics  of  operative  efficiency 
are  erroneous  because  of  the  elimination  of  large  numbers  of  employees  in  foreign  telephone  serv- 
ice, because  of  the  duplications  in  the  count  of  toll  messages  in  foreign  countries,  because  the  method 
of  equating  traffic  is  not  even  roughly  approximate,  because  of  the  jirobable  differences  in  methods 


30 
of  counting 'local  messages,  and  because  local  messages  cannot  be  even  roughly  equated  for  foreign 
countries  ;  but  also  that,  under  government  systems,  there  is  not  given  the  broad,  full  service  which  would 
secure  tlie  highest  utilization  of  the  system  on  which  Mr.  Lewis  lays  so  much  stress,  although,  possi- 
bly, their  practice  of  limiting  hours  of  service  very  largely  to  the  daylight  period  may  assure  full  loads 
for  operators  while  on  duty.  Even  under  these  conditions,  the  evidence  makes  it  clear  that  the  number 
of  calls  per  employee  in  the  Bell  Systeir  is  much  greater  than  in  any  other  country. 

However,  there  are  other  facts  available  wiiich  are  more  indicative  of  the  institutional  ef- 
ficiency of  the  private  systems.  Of  these,  perhaps  the  most  significant  are  those  relating  to  the  cost 
of  ])lant  under  government  ownership;  for  if  it  costs  a  government  more  per  unit  to  build  plants,  in 
spite  of  the  differences  in  price  levals,  it  is  obvious  not  only  that  the  constructive  efficiency  of  the 
governments  is  inferior,  but  that  inevitably  this  inefficiency  must  result  in  unnecessary  bunlens  on 
the  public,  either  through  rates  or  through  taxation.  The  following  statistics  show  the  average  in- 
vestment per  station  of  the  various  systems.     These  statistics  are  all  official,  tiiough  not  all  published: 

AVERAGE  INVESTMENT  PER  TELEPHONE."* 
January  1,  1913. 


Country. 


Average  Investment 
per  Telephone. 


Austria  

Belgium     

France    

German    Empire 

Hungary    

Luxemburg     

Switzerland    

Australia   

United  States   (Bell)*. 


$211 
276 
257 
178 
192 
176 
190 
163 
153 


♦January  1,  1914. 

In  Norway,  Sweden,  Denmark,  Italy  and  The  Netherlands  telephones  are  operated  under  both 
private  and  public  management ;  but,  inasmuch  as  the  governments  own  the  toll  lines  but  do  not 
own  all  the  telephone  stations  using  such  lines,  and  as  the  companies  own  large  numbers  of  stations 
but  few  toll  lines,  the  investment  statistics  for  these  countries  would  of  course  not  be  significant. 


B. 


AS  TO  THE  RELATIVELY  HIGH  PRICES  OF  PRIVATE  TELEPHONE  SERVICE. 

Mr.  Lewis'  assumptions  concerning  telephone  rales  relate  to  those  for  both  exchange  and  toll 
service.  Regarding  rates  for  exchange  service,  he  introduces  tables  purporting  to  show  that  the 
average  exchange  rate  per  message  is  higher  in  the  Bell  System  than  under  government  operation; 
that  the  rates  for  local  service  in  large  cities  are  high  under  Bell  operation  and  low  under  govern- 
ment operation ;  and  that  Bell  rates  are  exorbitant,  as  shown  by  the  history  of  rates  under  competi- 
tion and  by  comparisons  of  rates  in  competitive  and  non-competitive  exchanges.  Concerning  toll  rates 
he  gives  a  table  purporting  to  show  that  American  toll  rates  are  very  high  as  compared  with  govern- 
tnent  toll  rates.  These  tables  are  analyzed  below. 
Assumptions  as  to  Foreign  and  Bell  Exchange  Rates. 

Mr.  Lewis  first  shows  a  comparison  of  "local "  rates,  by  which  he  means  the  average  exchange 

revenue  per  local  message.     With  these  rates  he  compares  letter  rates,  and  show-s  the  percentage  by 

which  the  telephone  "rate"  exceeds  or  is  exceeded  by  the  letter  rate. 

MR.  LEWIS'  TABLE  NO.  9. 
Letter  and  local  telef'hone  rates. 


Country. 


Norway    (private) 

Sweden    

Japan    

Norway    

Russia    

Hungary    

Denmark  (private) 

Austria 

Italy    

Germany   

Netherlands    

Belgium   

Switzerland    

United  States   (Bell  Co.). 

Luxemburg  

France  


Letter 

rate 

Rank. 

Local 

Letter 

exceeds 

rate. 

rate. 

phone 
rate. 

per  cent. 

1 

$0,004 

$0,026 

550 

2 

.005 

.026 

420 

3 

.005 

.015 

200 

4 

.006 

.026 

333 

5 

.007 

.036 

414 

6 

.009 

.020 

122 

7 

.010 

.026 

160 

8 

on 

.020 

80 

9 

.013 

.028 

115 

10 

.015 

.020 

33i 

11 

.015 

.020 

33J 

12 

•.015 

.020 

33  J 

13 

.017 

.020 

17 

14 

.021 

.020 

ts 

IS 

.024 

.020 

t20 

16 

.024 

.020 

t20 

•Belgium,   1911.        fPhonc  rate  exceeds  letter  rate. 


31 

Mr.  Lewis  states,  in  connection  with  this  table,  that  the  inference  which  may  be  drawn  from 
the  rank  of  the  Bell  rates  is  not  to  be  explained  on  the  ground  that  the  United  States  postal  rates 
are  too  low.  "It  yields,  in  fact,  a  profit  of  just  one-third."  The  reliability  of  this  statement  is  sug- 
gested in  the  discussion  of  postal  deficits,  pages  2    to  4,  hereinbefore. 

Even  if  it  were  assumed  that  these  statistics  are  correct,  this  table  could  not  be  construed  as 
supporting  an  argument  for  government  ownership,  because,  according  to  Mr.  Lewis,  private  com- 
panies in  Norway  rank  first  as  to  low  rates,  because  the  private  companies  in  Denmark  rank  higher 
than  several  important  government  systems,  and  because  the  Bell  rates,  as  shown  by  Mr.  Lewis,  are 
exceeded  in  the  government  systems  of  Luxemburg  and  France.  In  general,  these  statistics  exclude 
so  many  factors  that  no  attempt  to  answer  them  in  detail  is  warranted,  particularly  as  accurate  statis- 
tics which  are  significant  and  which  indicate  the  actual  situation,  are  given  independently  hereinafter, 
and  are  the  best  answer  to  such  a  vague  comparison.  However,  for  the  sake  of  completeness,  the 
following  facts  may  be  helpful   in  correcting  any  unwarranted  impressions  they  may  give : 

1.  Mr.  Lewis' statistics  are  in  error  as  follows :  The  Bell  figure  should  be  $.017  (1912), 
which  is  below  the  postage  rate;  and  the  Switzerland  figure  should  be  $.028.'"  These  facts  are  of 
some  importance  as  they  give  the  Bell  Companies  a  better  rank  than  the  government  systems  of 
Luxemburg,  France,  and  Switzerland. 

2.  Such  slight  significance  as  attaches  to  these  statistics  is  destroyed  by  the  very  doubtful 
character  of  the  data  as  to  local  conversation    in  foreign  countries,  discussed  on  page  28. 

3.  The  letter  rate  is  not  an  index  either  to  the  cost  or  the  value  of  the  telephone  message. 
Telephone  service  and  mail  service  are  so  dissimilar  that  no  comparison  of  prices  is  significant. 
The  wide  variation  in  the  relation  of  the  telephone  rate  to  the  letter  rate  in  those  countries  where 
the  government  operates  both  services  proves  this. 

4.  If  Mr.  Lewis  intends  to  use  the  letter  rate  as  a  standard  of  value,  the  wide  variations 
in  the  telephone  rate  in  countries  like  Norway,  Sweden,  Denmark,  Holland,  and  Belgium,  where 
conditions  are  substantially  alike,  show  that  the  letter  rate  cannot  be  so  used. 

5.  On  the  basis  of  Mr.  Lewis'  own  statistics,  it  is  apparent  that,  as  a  whole,  rates  are  lower 
where  private  companies  operate.  Of  the  six  countries  having  a  rate  of  $.01  or  less,  as  shown  by 
Mr.  Lewis,  four,  namely,  Norway,  Sweden,  Russia,  and  Denmark,  are  very  largely  operated  by 
private  companies.  Of  those  in  which  the  rate  is  more  than  $.01,  as  shown  by  Mr.  Lewis  (ex- 
cepting the  United  States),  there  are  only  two  out  of  eight,  Italy  and  The  Netherlands,  in  which 
private  concerns  operate. 

Mr.  Lewis  also  gives  the  following  statistics,  from  which  he  draws  no  general  conclusions, 
but  which  arc  intended  to  indicate  that  the  rates  in  the  United  States  are  high  as  compared  with 
government  rates. 


32 

MR.  LEWIS'  TABLE  NO.  10. 
Table  gh-itig  atmual  tariffs,  fl.il-ratc  sen-ice.  for  leading  cities  of  different  countries. 

Christiania    $2L44 

Stockholm  ' '  *  24  44 

The  Hague ..'.'.'.'.'.  2o 00 

Copenhagen 32.00 

'f  ol^)  o 34.00 

Auckland,  New  Zealand '  34  09 

New   Haven 84  00 

Cincinnati ....'.'.'.'.'.'.'.'.'.  100 00 

Oakland,  Cal 84.00 

Philadelphia   *gQ  qq 

Chicagot    ■  •84;00 

Denver  138.00 

Amsterdam     36.00 

Rotterdam 36^00 

Berhn  4j  20 

Budapest    57.90 

Paris  77  20 

London 82.79 

Boston   '  ■  ■  125.00 

Seattle    90.00 

Washington    168.00 

Baltimoret    174  00 

San  Francisco 180.00 

New    Yorkt 228.00 

American  average  exceeds  foreign  average  300  per  cent. 

•Competition. 

tRecently  this  rate  raised  to  $125;  competition  presumably  removed. 

JBaltimore  and   New   York  limited  to  5,400  and  5,700  calls. 

This  comparison  is  misleading  and  incorrect,  because: 

1.  It  is  a  comparison  of  rates  in  exchanges  having  exclusively  unlimited  service  with  those 
having  chiefly,  or  exclusively,  message  service.  Mr.  Lewis  admits  that  such  a  comparison  does 
not  warrant  definite  conclusions,  and  for  this  reason  gives  a  second  table  (Table  No.  11)  in  which 
rates  in  what  purport  to  be  exclusively  message  service  exchanges  are  compared.  However,  it 
may  be  well  to  note,  in  connection  with  Tabic  Xo.  10,  that  llat  rates  are  quoted  exclusively  only 
in  The  Hague,  Tokio,  Auckland,  Amsterdam,  Rotterdam,  Budapest,  and  Paris;  and  that  in  none 
of  the  cities  named  are  the  Bell  Company  rates  exclusively  flat  rates. 

2.  The  rates  compared  are  maximum  rates,  whereas  in  most  flat  rate  cities  not  more  than 
10%  of  the  subscribers  pay  maximum  rates,  and  in  message  rate  exchanges  less  than  l^o  pay 
the  maxirnuni  quoted  charge,  excluding  Private  Branch  Exchange  subscribers. 

3.  A  comparison  of  minimum  rates  would  be  more  significant  because,  in  many  cases,  the 
minimum  rate  is  used  by  tlie  plurality  of  subscribers,  and  because  it  indicates  the  availability  of 
the  service.  In  this  connection  it  may  be  noted  that,  whereas  the  mean  maximum  American  rate  is 
$133.02  and  the  mean  maximum  rate  in  the  foreign  cities  is  $43.46  (as  shown  by  Mr.  Lewis),  the 
mean  minimum  rale  in  the  American  cities  is  $23.17  as  against  the  mean  foreign  minimum  rate  of 
$28.80.  The  minimum  rate  of  the  American  cities  includes  at  least  365  messages  per  annum, 
whereas  in  two  of  the  European  cities  the  minimum  rate  includes  no  outward  service.* 

4.  The  statement  that  the  Chicago  rate  has  recently  been  increased  to  $125,  "competition 
presumably  removed,"  is  incorrect.  The  rate  of  $84  is  a  flat  rate  of  the  independent  company 
still  operating;  and  the  $125  rate  of  the  Chicago  Telephone  Company  has  been  in  elTect  for  many 
years,  and  was  authorized  by  the  Chicago  City  Council  after  complete  public  investigation  in  1907. 
Under  the  Chicago  telephone  rate  ordinance  of  1913,  this  flat  rate  of  $125  was  abolished  as  to  all 
new  subscribers,  and  in  its  stead  a  rate  of  approximately  $125  for  not  more  than  6.000  mcssa.trcs 
was  established.  It  should  be  noted  that  no  change  in  rates  in  Chicago  has  ever  been  made  as  a 
result  of  competition.  It  is  also  important  to  note  that  the  rate  of  $84  is  the  only  rate  quoted  by 
the  independent  company  for  business  service,  and  that  more  than  f>0%  of  the  Chicago  Bell 
business  subscribers-f  pay  less  than  the  independent  company's  minimum  business  rate. 

♦Stockholm  and  Copenhagen 

tNot   including   Private   Branch   Exchange  subscribers. 


33 


5.  Air.  Lewis'  Table  No.  10  consists  of  a  list  of  cities  not  selected  with  regard  to  size, 
population,  or  the  number  of  telephones.  It  is  a  matter  of  general  knowledge  that  rates  in  large 
exchanges  must  be  higher  than  in  small  exchanges.  I-"or  example,  tlie  rates  of  the  Post  Office  in 
London  are  higher  than  in  the  provinces;  the  rates  in  Berlin  are  higher  than  in  other  German 
exchanges ;  the  rates  in  Paris  are  higher  than  in  other  cities  in  France. 

6.  A  comparison  of  the  rates  in  the  foreign  exchanges,  named  by  Mr.  Lewis,  having 
unlimited  service  exclusively,  with  those  in  the  L^nited  States  of  similar  size  having  unlimited 
service  exclusively,  shows  that  the  foreign  rates  are  higher: 

Comfarison  of  rates  in  exclusively  flat  rale  exchanges. 


Foreign  Exchanges"*  Named  by  Mr. 

Lewist 

Bell  Companies.                                           | 

Name 

of 

Exchange. 

Number 

of 

Telephones 

Ma.ximum 
Rate. 

Minimum 
Rate. 

Name 

of 

Exchange. 

Number 

of 

Telephones. 

Maximum 
Rate. 

Minimum 
Rate. 

%of 
Subscribers 

Paying 

Not  More 

Than  Foreign 

.Minimum  Rate.* 

The   Hague 

Tokio 

11,594 
34,910 
5,892 
14,341 
12,442 
24,567 

95,033 

$36.00 
40.50 
38.88 
46.00 
44.00 
60.90 

7720 

$24.00 
31.50 
16.61 
46.00 
34.40 
60.90 

77.20 

San  Antonio 

Omaha 

Terre  Haute 
Rochester  . . 
St.  Joseph.. 
St.   Paul.... 

New  York. . 
Philadelphia. 
Chicago    . . . 

11,231 
33,358 
4,328 
14,010 
12.094 
23,426 

483,653 
133,523 
308,177 

$60.00            $18.00 
72.00             24.00 
42.00              18.00 
48.00             24.00 
60.00             24.00 
72.00             24.00 

♦*$36.00  and  $42. 
1        18.25 

78% 
79% 

77% 
81% 
94% 

Under  $77.00 
00       79% 
90% 
91% 

.\uckland    

.Amsterdam    .  .  . 
Rotterdam   .... 
Budapest 

Parist 

24.00 

JThere  is  no  exchange  in  the  United  States  having  95,000 
telephones  or  more,  with  exclusively  unlimited  service,  so 
that  the  minimum  rates  of  New  York,  Philadelphia  and 
Chicago  are  shown   for  comparison  with   Paris  rates. 

**For  Manhattan ;  lower  rates  in  other  parts  of  the  city, 
minimum  $24.00. 


*The  per  cent,  of  subscribers  paying  not  more 
than  the  foreign  minimum  rate,  is  based  on  main 
stations,  excluding  private  branch  exchanges,  coin 
boxes   and   public   pay   stations. 

fThcse  rates  include  "entrance  fees"  where 
charged  and  therefore  represent  the  cost  of  service 
for  the  first  year. 

Recognizing  some  of  the  inconsistencies  in  Table  No.  10,  Mr.  Lewis  also  quotes  the  following 
statistics  of  rates  in  message  rate  exchanges: 

MR.  LEWIS'  TABLE  NO.  11. 
Hales  per  call  for  measured  service  in  principal  cities  of  the  world. 


Country. 

Per  call. 

2,000  calls. 

5,000  calls. 

10,000  calls. 

Switzerland,  Berne 

Covington,   Ky 

$0.0140 
.0450 
.0184 
.0500 
.0197 
.0490 
.0200 
.0400 
.0200 
.0450 
,0216 
.0450 
0240 
.0555 
.0294 
.0648 
.0197 
.0493 

$0.0116 
.0360 
.0100 
.0336 
.0106 
.0366 
.0140 
.0280 
.0160 
.0360 

*.0086 
.0360 

*.01S4 
.0420 
.0197 
.0487 
.0123 
.0371 

$0.0100 
,0238 
.0060 
.0312 
.0086 
.0283 
.0120 
.0240 
.0100 
.0330 

♦.0043 
.0330 

*.0077 
0400 
.0171 
.0265 
.0085 
.0300 

Belgium,   Brussels   

Baltimore,  Md.   . .'. 

Australia,  Sydney 

Washington,    D.  C 

Italy,   Rome   .... 

New   Orleans,   La 

Austria,   Vienna    .'. 

Cincinnati.    Ohio    

Germany,  Berlin  

Boston,  Mass 

France,    Paris    

New   York,   N.  Y 

Denmark,    private    

San    Francisco,   Cal 

Average  postal  telephone  rate .-.. 

Average  American  telephone  rate 

American  rate  exceeds  postal  (per  cent.) 

167 
150 

200 
250 

215 
250 

American  rate  exceeds  Australian   (per  cent.) 

'Computed  on  flat  rates. 
This  comparison  is  erroneous  and  misleading  for  the  following  reasons: 

1.  It  is  not  a  comparison  of  rates  for  message  service,  for  the  rates  in  effect  in  Brussels, 
Rome,  Paris,  and  Vienna  are  not  message  rates.  Hence,  four  out  of  the  eight  foreign  cities 
should  be  excluded  since,  as  Mr.  Lewis  admits,  flat  rates  cannot  be  compared  properly  with 
message  rates. 


34 


2.  ^^'hen  both  flat  rates  and  message  rates  are  quoted,  Mr.  Lewis  uses  whichever  is  the 
cheaper  in  computing  his  statistics  for  foreign  cities  (for  example,  in  BerUn)  ;  but  in  preparing  his 
statistics  for  some  American  cities  (Boston,  Cincinnati,  and  New  Orleans)  he  has  not  done  this. 

3.  The  exchanges  compared  vary  so  widely  as  to  the  number  of  telephones,  as  shown  by 
the  following  table,  that  in  most  cases  no  comparison  of  rates  could  be  significant : 

JANUARY   1.   1913. 


FOREIGN  CITIES 

COMPARED  WITH 

City 

Telephones"" 

Telephones 

City 

Berne  

Brussels  

Sydney   (1912)    

Rome  (1911)   

5,113 

57  186 

Covington,    Ky.     (Part    of 
Cincinnati,  ().,  exchange) 
Baltimore,    Aid. 
Washington,   U.  C. 
New   Orleans,  La. 
Cincinnati,     O.     (including 
Covington) 
Boston,  Mass. 
Xew  York 
San  Francisco,  Cal. 
.Average 

21,470 

51  170 

22,000 

10,049 

47,297 

18,882 

Vienna 

Berlin    

56,747 

57,186 

1+4.543 

95  033           

1S5,703 

as.^  r.i  ^ 

Paris    

Copenhagen 

.Average    

50  802 i 107  702 

50.720 1 131,656 

4.  The  rates  in  Berlin  do  not  include  night  service,  for  which  a  special  charge  of  about  5 
cents  per  night  message  is  made  both  to  message  rate  and  flat  rate  subscribers.  It  should  be 
noted  that  this  charge  is  in  addition  to  any  charges  which  would  apply  on  day  messages. ''"  A 
very  large  amount  of  traffic  is  handled  during  night  hours  in  large  American  cities,  so  that  ob- 
viously no  comparison  could  be  made  between  the  Berlin  rates  and  those  of  any  American  city. 

5.  The  comparison  relates  only  to  rates  for  individual  line  business  service.  On  what 
basis  it  is  assumed  that  a  comparison  of  rates  for  this  class  of  service  only  is  supposed  to  be 
significant,  is  not  clear.  As  a  matter  of  fact  iiie  rate  for  this  service  is  not  only  the  hig/-est, 
but  is  also,  from  the  standpoint  of  the  public,  among  the  least  important.  Not  only  do  the  very 
great  majority  of  the  subscribers  in  Bell  exchanges  receive  service  at  lower  rates,  but  the  great 
majority  are   residence  subscribers  who  receive  service  at  very  much  lower  rates. 

It  will  be  seen  from  all  of  the  above  that  Mr.  Lewis'  Table  No.  11  is  not  significant  in  any  way. 
As  a  matter  of  fact,  a  comparison  of  this  general  type  that  covered  even  the  chief  factors  of  im- 
portance in  the  respective  rate  schedules  would  be  so  intricate  as  not  to  permit  any  general  con- 
clusions therefrom. 

A  General  Comparison  of  Foreign  and  American  Exchange  Rates. 

Mr.  Lewis  has  attempted  to  indicate  the  general  relation  between  American  and  foreign  ex- 
change rates  by  isolated  comparisons.  As  has  bei-n  shown,  his  methods  and  the  specific  rates  selected 
were  far  from  correct;  but  such  detailed  comparisons  must  necessarily  fail  as  a  basis  for  general 
conclusions.  As  it  is  intended  to  give  the  facts  pertinent  to  the  phase  of  the  government  ownership 
question  under  discussion,  however,  an  attempt  is  made  below  to  supplement  the  criticism  of  Mr. 
Lewis'  statistics  and  conclusions,  as  completely  as  brevity  and  the  technical  character  of  the  subject 
will  permit,  with  general  information  indicating  the  ultimate  efYect  of  government  ownership  on  tele- 
phone exchange  rates  as  a  whole. 

1.  It  should  be  noted  not  only  that  Mr.  Lewis'  comparisons  of  rates,  with  the  exception 
of  Table  No.  9,  are  without  significance  because  of  the  comparison  of  flat  rales  with  message 
rates,  and  of  rates  in  large  exchanges  with  those  in  small  exchanges,  but  also  that  no  comparison 
of  rates  for  a  specific  class  of  service  is  significant  Although  this  fact  is  more  fully  developed 
in  the  discussion  of  Mr.  Lewis"  Tables  Nos.  12  and  13,  following,  it  may  be  noted  here  that 
rates  for  residence  service  in  foreign  countries,  relatively  to  business  rates,  are  much  higher  than 
in  the  United  States,  so  that  where  a  superficial  analysis  might  indicate,  in  some  cases,  that  the 
foreign  business  rates  were  somewhat  lower  than  in  the  United  Stales,  a  further  analysis  would 


35 

show  the  foreign  residence  rates  in  comparable  exchanges  to  be  much  higher  than  in  the  United 
States.  It  is  a  matter  of  general  knowledge  that  American  residence  rates  are  much  lower  than 
business  rates;  but  in  many  foreign  countries,  for  example  in  France,  Switzerland,  and  Germany, 
there  is  no  distinction  between  business  and  residence  service.  That  this  is  a  factor  of  great 
importance  in  rate  comparisons  is  indicated  by  the  fact  that  in  American  cities  practically  no 
residence  subscribers  pay  an  amount  as  high  as  the  only  rate  available  for  government  service 
in  Paris  ($77.20),  and  that  in  Chicago  there  are  more  residence  telephones  than  there  are  tele- 
phones of  all  kinds  in  the  entire  Paris  exchange  (95,000),  and  that  some  140,000  of  these  Chicago 
residences  pay  a  rate  $50  lower  than  the  Paris  rate. 

2.  A  more  serious  error  of  omission  on  the  part  of  Mr.  Lewis  is  his  failure  to  compare 
rates  for  any  except  large  cities.  Rates  under  government  operation  do  not  show  a  close  adapta- 
tion of  schedules  to  the  cost  and  value  of  service,  because,  for  one  reason,  the  governments  gen- 
erally show  little  interest  in  the  development  of  the  service  except  in  large  cities,  and,  consequently, 
are  inclined  toward  a  standardization  of  one  schedule  for  all  exchanges,  regardless  of  size  or,  at 
most,  to  have  no  more  than  two  or  three  schedules.  Thus,  in  Switzerland  there  is  one  schedule 
for  all  exchanges  regardless  of  size ;  and  although  this  has  proved  almost  disastrous  both  to 
development  and  to  tlie  revenues,  it  does  make  possible  the  burdening  of  the  smaller  places  for 
the  advantage  of  the  larger,  where  costs  and  values  of  service  do  not  warrant  subsidization. 

The  broad  policy  of  the  Bell  Companies  has  been  to  afford  telephone  service  in  all  parts 
of  their  territories ;  and  their  rates  have  been  such  as  to  develop  the  country  districts  as  well 
as  the  urban  communities.  Although  a  broad  study  of  foreign  rates  indicates  that  the  govern- 
ment rates  are  relatively  higher  for  residence  service  even  in  large  cities  (Paris  and  Brussels,  for 
example)  than  in  the  United  States,  it  is  particularly  true  that  in  the  great  number  of  small 
places  the  rates  in  the  United  States  are  lower,  even  in  actual  currency,  than  in  the  foreign 
countries  as  a  whole.  A  complete  exposition  of  this  fact  is  possible  only  in  an  extended  dis- 
cussion which  would  be  necessarily  technical  in  nature;  but  a  comparison  of  the  character  of 
telephone  development  in  the  several  countries  will  serve  to  indicate  the  essential  correctness  of 
this  statement. 


TELEPHONES  PER  ONE  HUNDRED  POPULATION   IN   URBAN  AND  RURAL    TERRITORIES"' 


Country 


Austria    

Belgium     

France    

German  limpire 
Great  Britain  . . 

Hungary    

Italy  

Netherlands    . . . 

Sweden    

Switzerland  .... 


Average  of  above  Countries. 
United  States 


Exchanges  of  i    Exchanges  of 
over  100,000    |  less  than  100,000 
Population  Population 


2.6 
18 
2.3 
4.6 
2.6 
2.6 
1.2 
3.0 
17.7* 
6.0 

3.16 

11.44t 


.30 

.36 

.47 

1.20 

.75 

.25 

.14 

.74 

2.46 

1.85 

.67 

8.17 


Per  cent.  Rural 

to  Urban 
Development 


11.5 
20.0 
20.4 
26.1 
28.8 
9.6 
11.7 
24.6 
13.9 
30.8 

212 

71.4 


♦Due  largely  to  private  operation  in  Stockholm. 

tBell  stations  only  included.    The  percentage  is  slightly  in  error  for  this  reason. 

From  this  table  it  is  apparent  that,  poor  as  is  the  development  in  the  larger  European  cities, 
even  this  development  is  attained  at  the  expense  of  a  far  more  impoverished  rural  development. 
In  the  light  of  telephone  experience,  this  relative  restriction  of  country  service  must  be  attrib- 
uted chiefly  to  high  rates  for  small  exchanges,  and  perhaps,  in  part,  to  an  inadequate  service.  This 
fact  is  corroborated  by  the  statistics  as  to  revenues  per  station  earned  by  the  government  sys- 
tems. In  some  cases  the  revenues  per  station  are  considerably  /iiV/irr  than  those  of  the  Bell 
System,  although  in  view  of  the  clieaper  labor,  absence  of  tax  burdens,  freedom  from  legal 
responsibility,  and  the  really  very  small  exchanges  in  large  cities,  they  should  be  expected,  as  a 
whole,  to  be  very  much  less  than  in  the  United  States.  The  facts  concerning  the  actual  ex- 
change service  revenues  per  telephone  of  the  various  government  systems  where  there  is  no  pri- 
vate operation  arc  as  follows: 


36 

AVERAGE  EXCHANGE  REVENUE  PER  TELEPHONE" 


Country. 


Austria,  1^12  

Belgium,   1911 

France,   1912 

German  Empire.   1911 

Great  Britain.'  1912 

Hungary,    1912 

Switzerland.    1912 

New  Zealand,   1912 

Australia.  1912 

Average  for  Foreign  Countries. . 

Bell  System,  1912 


.•\vcraye 

Exchange 

Revenue 

per 
telephone. 
~"$24.'.)(r 
39.05 
28.01 
22.69 
32.60 
30.81 
18.43 
24.44 
28.53 


$2682 
$30.93 


•Not  including  municipal  systems. 
In  Belgium  and  Great  Britain  the  exchange  revenues  per  telephone  exceed  tliose  of  the  Bell 
System;  and  tliat  of  Hungary  is  about  equal  to  that  of  the  Bell  System,  so  that  no  special 
comment  is  needed  as  to  their  rates.  With  reference  to  the  other  countries,  however,  whose 
average  revenues  appear  to  be  lower  than  those  of  the  Bell  System,  there  are  several  important 
but  simple  factors  involved,  which  will  be  made  clear  below.  One  of  the  chief  considerations  is 
that  of  the  size  of  the  exchange  operated.  As  stated  previously,  it  is  generally  well  known  that 
rates  in  large  exchanges  are  necessarily  higher  than  those  for  small  exchanges.  Unbiased  evi- 
dence of  this  is  given  in  the  fact  that  the  government  rates  in  large  exchanges  are  higher  than 
in  small  exchanges,  despite  the  governmental  tendency  toward  inflexible  rate  systems.  Thus  the 
rates  in  London  are  higher  than  elsewhere  in  Great  Britain ;  those  in  Christiania  are  higher  than 
those  in  other  Norwegian  exchanges;  those  in  Paris  higher  than  those  in  other  French  cities; 
and  so  on.  Hence,  it  would  logically  be  expected  that  the  average  revenues  per  station  in  coun- 
tries having  a  srnall  number  of  large  exchanges  would  properly  be  less  than  in  a  country  having 
a  large  number  of  large  exchanges,  other  things  being  equal.  With  this  in  mind  it  is  important 
to  note  that  none  of  these  countries  have  more  than  a  few  exchanges  of  any  considerable  size, 
whereas  the  Bell  has  many  such  exchanges.  The  significance  of  this  fact  may  be  more  clear  from 
the  following  table: 


Country 


Austria'"   

France"*    

German  Etupire"^  

Switzerland'" 

New  Zealand""    

Bell  System^ 

Australia — No  information  obtainable. 


No.  of  Exchanges 

of  more  than  5,000 

Telephones 


2  • 

4 
3St 

4 

1 
96 


Largest 
Foreign 
Exchange 


Vienna 

Paris* 

Berlin 

Zurich 

Auckland 


-Vo.  of  Bell 
F.xchanges  Larger 

than  Largest 
Foreign  Exchange 

9 

5* 

3 
46 
86 


*In  every  one  of  the  five  American  exchanges  larger  than  Paris,  the  average  revenue  per  telephone  is 
considerably  less  than  the  minimum  rate  in  Paris. 

tThere  are  only  three  exchanges  in  Germany  with  more  than  30,000  telephones,  as  against  24  in  the  Bell 
System. 

tCities  of  more  than  50.000  population  only  arc  used.  There  are  several  small  cities  with  more  than 
5,000  telephones. 

In  addition  to  the  above,  it  should  also  be  noted  that  there  are  2,852,907  telephones  in 
the  Bell  System  exchanges  in  cities  in  the  United  States  of  more  than  50,000  population.  This  is 
more  than  all  the  telephones  in  all  the  countries  for  which  revenue  statistics  are  shown  above; 
yet,  despite  the  fact  that  the  Bell  System  carries  this  large  number  of  telephones  in  large  ex- 
changes, where  the  expenses  of  operation  arc  much  higher,  the  average  revenue  per  station  of 
the  Bell  System  is  only  about  $4  higher  than  the  average  of  all  the  countries  named,  in  absolute  cur- 
rency values. 

3.  Although  a  comparison  of  the  telephone  rates  of  government  systems  and  of  those  of 
the  Bell  System,  as  given  above,  shows  that  the  Bell  rates  are  not  higher  than  those  of  the  gov- 
ernments in  terms  of  currency,  the  full  significance  of  this  fact  lies  in  the  consideration,  not  only 
that  the  Bell  System  has  developed  both  the  large  and  the  small  exchange  business,  but  also  that 
the  service  is  far  more  adequate  in  scope  and  quality  than  in  the  government  systems.    The  facts 


37 

concerning  the  quality  of  service  cannot  be  stated  in  statistical  terms  except  on  the  basis  of 
scientific  service  observations  which  are  not  obtainable  for  foreign  countries;  but  the  facts  con- 
cerning the  adequacy  of  the  service  are  more  fully  known. 

Of  these  facts  the  most  significant  in  relation  to  rates  are  those  concerning  the  hours  of 
service.  It  has  already  been  shown,  page  29,  that  tlie  hours  of  telephone  operation  in  the  great  ma- 
jority of  the  exchanges  of  New  Zealand,  Switzerland,  Sweden,  and  Belgium  are  so  short  as  to 
impose  serious  limitations  on  the  emergency  value  of  telephone  service  in  all  except  ordinary 
business  hours,  and,  except  in  a  few  exchanges,  to  limit  the  use  of  the  telephone  during  evening 
and  night  hours  and  on  Sundays  and  holidays.  .-Mthough  the  information  concerning  this  factor 
in  rates  and  service,  in  New  Zealand,  Switzerland,  Sweden,  and  Belgium,  will  serve  to  indicate 
the  general  conditions  of  foreign  service,  it  is  important  to  note,  for  completeness,  that  similar 
conditions  are  found  in  Austria,  Germany,  France,  Great  Britain,  and  Australia.  This  state- 
ment is  based  on  the  following  general  information: 

Austria:  "As  a  rule,  the  hours  of  offices  (telephone  exchanges)  conform  to  those  of  the 
telegraph  offices.  Centrals  with  more  than  100  main  stations  (i.  e.,  subscribers)  have  at  least 
full  day  service  (in  summer  frum  7  a.  m.,  in  winter  from  8  a.  m.,  to  9  p.  m.)."""  This  statement 
is  significant  in  view  of  the  facts  that  only  1.2%  of  the  government  telegraph  offices  are  open  all 
day  and  all  night,  and  that  only  8.47o  of  such  offices  have  complete  or  prolonged  day  service."* 

Germatty:  As  mentioned  above,  a  charge  is  made  in  all  German  exchanges  for  night  tele- 
phone calls.  Since  not  all  exchanges  are  open  at  night,  rates  are  also  quoted  for  connecting  two 
subscribers'  lines  continuously  during  the  hours  when  the  central  offices  are  not  operated;  or  for 
giving  a  continuous  connection  during  the  hours  when  the  subscriber's  central  office  is  not  oper- 
ated, with  some  distant  central  office  that  will  be  open  during  such  hours."" 

In  this  connection,  it  should  be  noted  that  even  in  places  of  30,000  inhabitants,  service  is 
not  given  after  9  p.  m.,  and,  although  the  people  complain  of  this,  the  government  does  not  act. 
Ilcrr  Wcndel,  in  the  Reichstag  on  February  21,  1913,  described  the  condition  in  the  following 
words   (translation)  : 

"I  cannot  forego  to  speak  here  about  the  wish  expressed  by  one  of  our  Electoral  Districts.  I 
refer  here  to  Freiburg.  There  the  entire  telephone  service  is  interrupted  at  9  o'clock  p.m.  Five  min- 
utes after  9  o'clock  it  is  impossible  to  oblam  a  telephone  connection.  Now  the  Town  Council  of 
Freiburg  has  addressed  the  Postal  Administration  and  asked  for  the  introduction  of  night  telephone 
service.  The  Postal  Administration  has  refused  the  request.  It  is  true  that  Freiburg  is  a  very 
pretty,  idyllic,  and  quiet  town,  and  I  am  glad  of  it;  moreover,  the  night  is  not  man's  friend.  I  admit 
this;  but  it  must  also  be  remembered  that  not  all  citizens  of  p-reiburg  go  to  roost  with  the  chickens, 
and  a  sudden  sickness,  accident,  fire — any  kind  of  trouble — may  require  a  quick  telephone  call  for 
a  physician,  or  for  a  fire  brigade,  just  as  much  after  9  o'clock  p.m.  as  prior  to  that  time.  It  seems 
to  me  indefensible  that  a  city  of  some  30,000  inhabitants  should  be  deprived  of  telephone  service 
at  9  p.m.,  and  it  is  the  duty  of  the  Postal  .\dministration  to  get  quickly  in  touch  with  the  Postal 
Direction  of  Freiburg  or  the  Upper  Postal  Direction  of  Dresden  in  order  that  this  justifiable  re- 
quest of  the   inhabitants  may  be  granted.''"' 

Even  in  the  day  time,  in  many  instances,  the  German  telephone  service  is  discontinued. 
Kraetke,  Secretary  of  State  for  the  Imperial  German  Post  Office,  with  reference  to  this  in- 
adequacy of  the  German  service,  s])oke  as  follows  in  the  Reichstag  on  February  21,  1913  (trans- 
lation) : 

"I  have  listened  to  the  wish  that  our  telephone  exchanges  should  also  be  kept  open  during  the 
noon  hours.  I  wish  to  state  that  the  various  authorities  have  been  instructed  to  exert  themselves  along 
this  line.  In  accordance  with  the  reports  which  are  before  me,  I  can  state  that  jO'/o  of  all  our  tele- 
phone exchanges  give  service  between  12  m.  and  1  p.m.  In  this  connection  it  has  also  been  stated 
that  it  is  a  mistake  that  neighboring  exchanges  stop  service  at  various  noon  hours.  I  have  also 
asked  the  various  Telephone  Directions  to  consider  this  request,  as  otherwise  our  telephone  exchanges 
are  not  as  valuable  to  the  people  as  they  might  be.""' 

Great  Britain:  There  are  many  .exchanges  in  small  places  which  do  not  have  continuous 
day  and  night  service,  the  break  of  service  being  from  10  p.  m.  to  4  a.  m.  or  5  a.  m."^ 

France:  Small  exchanges  are  closed. two  hours  at  noon,  after  seven  o'clock  at  night,  and 
after  ten  o'clock  in  the  morning  on  Sunday."'  In  some  of  the  larger  places  like  Limoges  (popu- 
lation 92,000)  all-night  telcjihone  service  is  given,  but  only  because  the  Chamber  of  Commerce 
pays  for  the  expense,  which  it  meets  through  subscriptions  from  the  municipality,  from  newspa- 
pers, and  from  the  general  public."*  Nimes  (population  80,000)  has  no  telephone  service  after 
midnight."* 


38 

Australia:  "Hours  of  Attendance.  When  tlie  revenue  from  subscribers'  lines  and  ser- 
vices connected  to  any  exchange  is  less  than  at  the  rate  of  £150  per  annum,  attendance  at  that 
exchange  shall  be  given  only  during  the  hours  for  which  the  office  in  question  is  usually  open 
for  the  transaction  of  public  business     *     *     *. 

"In  calculating  the  revenue  for  the  purpose  of  this  regulation  *  *  *  revenue  from 
any  trunk  line  connected  with  the  exchange  shall  not  be  included.""' 

4.  Although  a  study  of  the  foreign  rates  shows  that  the  rates  of  the  Bell  System  are, 
on  the  whole,  lower  than  those  of  the  foreign  governments,  a  comparison  of  rates  in  terms  of 
currency  values  is  not  fully  significant;  for  the  purchasing  power  of  money  in  the  several 
countries  varies  to  such  an  extent  that  absolute  rates  do  not  indicate  the  comparative  avail- 
ability of  the  service  to  the  public.  An  attempt  to  equate  exactly  the  telephone  rates  of  the 
various  countries  in  terms  of  the  purchasing  power  of  the  charges  is  practically  impossible, 
but  for  purposes  of  comparing  real  telephone  rates,  an  equation  based  upon  the  wages  paid  to 
operators  should  be  significant  and  approximately  correct,  especially  since  the  wages  of  operators 
constitute  a  ver\-  large  part  of  the  cost  of  telephone  service.  In  the  following  table,  the  ex- 
change revenues  per  station  are  equated  on  the  basis  of  the  wages  of  switchboard  operators 
in  the  principal  cities  of  each  country  after  three  years'  service : 

THE  RE.\L  AVERAGE  EXCHANGE  REVENUES  PER  STATION  IN  TERMS  OF  EQUIVALENT 

AMERICAN   DOLLARS.'" 


Country. 


Austria 

Belgium   

France    

German  Empire 
Great  Britain  . . 
Switzerland    . . . 


Real 
average 
exchange 
revenue. 


$75.60 
114.80 
63.60 
49.40 
59.30 
27.50 


Bell  System '     $30.93 


5.  The  facts  concerning  foreign  telephone  rales,  all  things  considered,  disclose  that 
the  rates  of  the  Bell  System  are  lower  than  those  in  foreign  countries.  In  three  cases  (Switzer- 
land, Australia,  and  New  Zealand),  however,  it  has  not  been  made  clear  that  this  is  true,  although 
a  consideration  of  the  very  small  exchanges  operated  in  these  countries  obviously  warrants  the 
opinion  that  the  differences  in  rates  are  properly  to  be  expected.  However,  in  the  case  of 
Switzerland,  where  the  equated  revenues  are  S27.50  per  station  as  against  $30.93  for  the  Bell 
System,  it  may  be  noted  that  there  is  a  deficit  of  about  140^  in  the  telephone  service,  so  that  the 
true  rate  is  about  $31.35  per  station,  and  therefore  higher  than  that  of  the  Bell  System.  (See 
Appendix  D.) 

In  the  cases  of  Australia  and  New  Zealand,  statistics  as  to  wages  have  not  been  available, 
but  it  is  generally  supposed  that  the  price  levels  in  these  countries  and  in  the  United  States 
are  approximately  the  same.  The  Australian  service,  however,  results  in  a  deficit  of  about  259?; 
(see  Appendix  D),  so  that  the  cost  per  telephone  for  exchange  service  is  about  $35.67 
as  against  the  nominal  average  revenue  of  $28.53,  and  the  average  of  the  Bell  System  of 
$30.93. 

In  New  Zealand,  the  average  telephone  rate  is,  of  course,  low  assuming  that  the  wage 
level  is  equal  to  that  in  the  United  States,  and  making  due  allowance  for  the  extremely  small 
average  size  of  the  exchanges  operated ;  but  these  rates  cover  a  telephone  service  probably  more 
restricted  as  to  hours  of  operation  than  in  any  country  in  the  world,  the  average  length  of 
hours  of  operation  probably  being  less  than  ten  hours  per  day. 

Mr.  Lewis'  Comparison  of  Rates  in  Competitive  and  Non-Competitive  Exchanges. 

In  connection  with  his  discussion  of  exciiangc  rates,  Mr.  I,ewis  prcsent.s  the  following  tables, 
said  to  have  been  provided  by  a  competitor,  concerning  Bell  rates  with  and  without  competition, 
and  purporting  to  show  that  the  Bell  rates  without  competition  are  much  higher  than  under  com- 
petition : 


39 


MR.  LEWIS'  TABLE  NO.  12. 

A  rival  of  the  Bell  system  gives  the  following  table  of 
comparative  rates  before,  during,  and  after  competition, 
presumably  flat   rates : 


Bell  rate  after 

competition 

Bell  rate 

Bell  rate 

wiped  out  or 

City. 

before  com- 

during com- 

Bell found  it 

petition. 

petition. 

impossible 
to  kill  com- 
petition 

Richmond,   Va... 

$72 

$12 

$72 

York,   Pa 

n 

15 

48 

San  Jose,  Cal.. . . 

60 

30 

60 

Dubuque,  Iowa.. 

48 

24 

48 

Winona,    Minn... 

48 

12 

48 

Savannah.    Ga... 

36 

18 

36 

Mobile,  Ala 

64 

18 

48 

Lynchburg,  Va.. . 

65 

12 

48 

Roanoke,  Va 

30 

30 

48 

Norfolk,   Va 

40 

40 

60 

Oswego,   N.   y... 

45 

30 

36 

Kenosha,  Wis 

30 

30 

42 

Iowa  City,  Iowa. 

42 

24 

36 

Tampa,   Fla 

30 

30 

54 

Average  rate. 

$49 

$23 

$49 

MR.  LEWIS'  TABLE  XO.  13. 

Postal  telephone  rates.  like  mail  rates,  are  uniform  for 
similar  services.  The  following  table  of  the  same  rival 
gives  the  rates  of  the  Bell  system  for  some  60  cities, 
graded  from  the  highest  to  the  lowest  populations.  The 
letter  (c)  indicates  competition.  The  depressing  influence 
of  competition  on   the  rates   is  obvious: 


No. 


Cit> 


Population. 


1 
2 
3 
4 
S 
6 
7 
8 
9 
10 
11 
12 
13 
14 
IS 
16 
17 
18 
19 
20 
21 
21 
23 
24 
25 
26 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
Zl 
38 
39 
40 
41 
42 
43 
44 
45 
46 
47 
48 
49 
50 
51 
52 
53 
54 
55 
56 
57 
58 
59 
60 


New  York.   N.  Y.. 

Chicago,   111 

Philadelphia,    Pa... 

St.  Louis,  Mo 

Boston,    Mass 

Cleveland,    Ohio... 

Baltimore,   Md 

Pittsburgh,    Pa 

Buffalo,  N.  Y 

San  Francisco,  Cal. 
Cincinnati,  Ohio. . . 
Washington,  D.  C. 
Los  Angeles,  Cal.. . 

Seattle,  Wash 

Indianapolis,  Ind.. . 
Providence,  R.  I.. . 

Rochester,  N.  Y 

Denver,  Col 

Portland,  Ore 

Toledo,  Ohio 

Oakland,  Cal 

New  Haven,  Conn. 

Memphis,  Tenn 

Scranton,  Pa 

Richmond,   Va 

Hartford,   Conn 

Trenton,  N.  J 

Springfield,  Mass.. 
Wilmington,  Del... 
Des  Moines,  Iowa. 

Norfolk,    Va 

Savannah,  Ga 

Portland,    Me 

Johnstown,   Pa 

Altoona,     Pa 

Springfield,   111..... 

Rlobile,    Ala 

Springfield,   Ohio.. 

York,    Pa 

Sacramento,    Cal..  . 

Berkeley,    Cal 

San  Diego,  Cal.... 
Dubuque,   Iowa. .. . 

Tampa,  Fla 

Roanoke,  Va 

Jackson,    Mich 

Decatur,  111 

Lynchburg,  Va 

San  Jose,  Cal 

Newport,  R.  I 

Fresno,  Cal 

Everett,    Wash 

Burlington,    Iowa. . 

Alameda,    Cal 

Oswego,   N.  Y 

Stockton,   Cal 

Kenosha,  Wis 

Winona,   Minn 

Helena,  Mont.. . ... . 

Iowa   City,    Iowa.. 


2,331,542 

2.185,283 

1,549,008 

687,029 

670,585 

560,663 

558,485 

533,905 

423,715 

416.912 

364,463 

331,069 

319,198 

237,194 

233,650 

224,326 

218,149 

213,381 

207,214 

168,497 

150,174 

133,605 

131,105 

129,867 

127,628 

98.915 

96,815 

88,926 

87,411 

86.368 

67,452 

65,064 

58,571 

55,482 

52.127 

51.678 

51.521 

46,921 

44,750 

44.696 

40,434 

39.578 

38,494 

37,782 

34.874 

31,433 

31.140 

29.494 

28,946 

27,149 

24.892 

24.814 

24.324 

23.383 

23,368 

23.253 

21.371 

18.583 

12,515 

10,091 


Rate. 


$228-a 

84-c 

90-c 

78-c 
125 

72-c 
174-b 

80-c 

72-c 
180 
100 
168 

63-c 

90 

54-c 

80 

48-c 
138 

72-c 

48-c 

84 

84 

48-c 

42-c 

72 

84 

36-c 

63 

46-c 

60 

60 

36 

60 

30-c 

30-c 

36-c 

48 

36-c 

48 

72 

84 

48-c 

48 

54 

48 

30-c 

30-c 

48 

60 

60 

60 

48-c 

72 

84 

36 

60 

42 

48 

60-c 

63 


.Vote  (a):  Limited  to  5,700  calls;  Manhattan  district 
only.    Note  (b)  :  Limited  to  5,400  calls. 

Twenty- four  cities,  averaging  342,486  in  population,  pay 
an  average  rate  of  $53  under  competition,  wliile  the  remain- 
ing 36  cities,  averaging  188,629  in  population,  without  com- 
petition, pay  $81.  Even  where  competition  is  absent  there 
docs  not  appear  to  he  any  rational  order  of  rates.  Stock- 
ton, Cal.,  with  23,253  population,  pays  the  same  rate  ($60) 
as  Des  Moines,  Iowa,  with  86.368.  and  pays  twice  as  much 
as  Johnstown.  Pa.,  with  55,482  population,  and  only  $24 
less  than  Chicago,  111.,  under  competition. 


40 

Mr.  Lewis'  conclusions  from  a  study  of  tiicse  tables  arc  apparently:  (1)  that  Bell  rates  are 
exorbitant  where  there  is  no  competition;  and  (2)  that  there  is  an  unjustifiable  lack  of  uniformity 
in  Bell  rates,  whereas  postal  rates  are  uniform  for  the  same  service.  With  reference  to  Table  No. 
12,  it  should  be  noted : 

1.  The  table  is  directly  mendacious  in  that  the  columns  sliowingf  Bell  rates  "before  com- 
petition" and  Bell  rates  "after  competition  wiped  out,  or  Bell  found  it  impossible  to  kill  compe- 
tion,"  are  for  the  highest  grade  of  business  service;  whereas  the  rates  shown  in  the  column  "Bell 
rate  during  competition"  are  in  no  case,  except  for  Kenosha,  Wisconsin,  rates  for  the  highest 
grade  of  business  service,  but  are  in  most  cases  for  a  lower  grade  of  residence  service;  and 
in  some  cases,  like  York,  Savannah,  and  Norfolk,  the  rate  stated  has  not  been  quoted  for  any 
kind  of  service.  The  rates  given  as  in  effect  before  and  after  competition  are  in  several  instances 
incorrect.  In  the  column  "before  competition"  the  rates  shown  for  Norfolk  and  Savannah 
were  not  quoted  for  any  class  of  service,  and  the  rate  shown  for  Winona  was  quoted  for  a 
party  line  service.  In  the  column  "after  competition  wiped  out,  etc.,"  the  rate  shown  for 
Norfolk  was  for  individual  line  flat  rate  business  service,  while  individual  line  message  rate 
business  service  was  available  at  $24.00  less  per  annum ;  the  rate  shown  for  Savannali  was  a 
residence  rate ;  and  the  rate  shown  for  Winona  was  not  quoted  for  any  class  of  service. 

2.  The  rates  of  the  following  exchanges  named  have  been  decreased,  instead  of  increased, 
after  competition  has  ceased : 

Richmond,  York  (still  competitive),  San  Jose,  Dubuque,  Savannah,  Mobile  (still  com- 
petitive), Lynchburg,  Oswego,  and  Iowa  City.  Rates  have  been  increased  by  the  Bell  Com- 
pany in  no  case,  with  the  possible  exception  of  Winona. 

3.  Such  reductions  as  have  been  made  in  rates  after  the  introduction  of  competition 
have,  in  most  cases,  been  similar  to  those  made  at  about  the  same  period  in  non-competitive 
exchanges. 

4.  The  statistics  given  by  Mr.  Lewis  are  not  only  incorrect  as  quoted  in  these  instances, 
but  the  inferences  which  he  draws  or  wishes  drawn  are  not  justified  in  general.  A  study  of 
the  rate  history  in  exchanges  where  former  competition  has  ceased,  in  places  of  more  than  10,000 
population,  shows  the  following: 

BELL  RATES  AFTER  CESSATION  OF  COMPETITION. 

No.  of  %  of 

Exchanges.  Exchanges. 

No  change  in  rates 47  51  T 

No  increase  in  rates  in  3  years 3  3V86 

Rates  decreased 30  32  J 

Rates  increased  w  ithin  3  years 13  14 

Total  93  100 

The  above  statistics  cover  exchanges  where  competition  ceased  prior  to  1913.  The  total 
number  of  such  exchanges  in  places  of  more  than  10.000  population  is  about  140,  and  those 
eliminated  in  compiling  the  above  table  were  not  used  because  of  no  record,  incomplete  record. 
Bell  exchange  sold,  or  facts  of  doubtful  interpretation. 


41 


With  reference  to  Table  No.  13  it  should  be  noted : 

1.  That  the  rates  quoted  purport  to  be  the  Bell  rates  for  individual  line  business  service; 
but  the  rates  quoted  are  not  Bell  rales  for  such  service  in  the  following  instances:  Chicago, 
Philadelphia,  Cleveland,  Minneapolis,  New  Orleans,  Denver,  Memphis,  Dayton,  Spokane,  Tren- 
ton,  Wilmington,   Springfield,  O.,   San  Diego,  Jackson,  Decatur,  and  Burlington. 

2.  The  rates  compared  are  those  for  flat  rate,  mixed  flat  and  message  rate,  and  ex- 
clusively messai^e  rate  exchanges.  Mr.  Lewis  admits  that  a  comparison  of  flat  rate  and  mes- 
sage rate  schedules  is  incorrect  and  misleading. 

3.  The  exchanges  are  apparently  compared  on  the  basis  of  population  and  not  on  the 
basis  of  the  number  of  telephones  ser\'ed.  The  following  statistics  will  indicate  how  mislead- 
ing the  comparison  is  in  this  respect: 

STATEMENT  ILLUSTRATING  COMPARATIVE  SIZE  OF  EXCHANGES  ASSOCIATED  IN  THE 

COMPARISON. 
Development  Statistics  as  of  January  1,  1913. 


COMPETITIVE  RATES. 

COMPARED  WITH— 

City.                              Company. 

No.  Telephones. 

^'°-                    City 
Telephones.               ^"y- 

Chicago  Bell 

Ind.t 

Philadelphia    Bell 

Ind.t 

308,177 
21,000 

133,523 
21,000 

366,596 

New  York   (Manhattan  and  part  of  Bronx) 

Buffalo Bell 

Ind.t 

32,231 
18,000 

107,702 

....  San   Francisco 

Indianapolis  Bellt 

Ind.t 

28,000 
14,000* 

35,365 

. . .  .Denver 

Rochester   Bellt 

Ind.t 

14,010 
14,000 

44,810 
26,250 

Seattle 

Providence 

Memphis  Bell 

Ind.t 

11,575 
3,000 

40,267 

Oaklandx 

Scranton   Bellt 

Ind. 

10,661 
3,000 

16.022 
17,939 
12.891 
16,180 

New  Haven 

Syracuse 

.  . .  .Birmingham 
....  Richmond,  Va. 

Trenton Bell 

Ind.t 

7,967 
3,000 

14.819 

Hartford 

Wilmington    Bell 

Ind.t 

9,255 
3,000 

15.502 
16.074 

Sprinfificld,  Mass. 

Des  Moines 

Johnstown Bellt 

Ind.t 

2.015 
5,500 

9.908 

Portland,  Me. 

Springfield,  O BclU 

Ind.: 

5.750 
4,000 

40,267 

Berkeleyx 

Everett    Bellt 

Ind.t 

2,167t 
2.200 

40,267 

Alamedax 

♦Includes   Broad   Ripple. 

tindicates  the  exchanges,  the  rates  of  which  arc  used  in  the  comparison. 

•Bell  rate,  $48.00;  Independent  rate  not  known. 

tAs  of  October  1,  1912. 

xOakland,  Berkeley;  and  Alameda  constitute  one  exchange. 

5.  In  comparing  rates  in  mess.ige  rate  cities,  the  maximum  quoted  message  charge  is 
used.  This  is  grossly  misleading,  since  less  than  one  per  cent,  of  the  subscribers  pay  the 
maximum  quoted  message  charge,  or  more,  in  any  exchange.  It  would  be  more  significant  to 
quote  the  minimum  message  charge,  since  from  30%  to  50%  of  the  development  in  a  given 
class  of  .service  is  secured  at  the  minimum  rate.  In  this  connection  the  following  comparison 
is  significant: — 


42 


R.\TES  FOR  IXDIVIDU.\L  LINE  BUSINESS  SERVICE.  AS  QUOTED  IN  CERT.MN 
COMPETITIVE   CITIES,   AND    THE    MAXIMI'M  AND  .\1IXIMU.\1  RATES  FOR 
THE    SAME   CLASS   OF   SERVICE  UNDER  MESSAGE  RATE  SCHED- 
ULES   IN   THE   NON-COMPETITIVE  CITIES. 


C0MPETITI\t. 

NON-COMPETITIVE. 

(For  Slime  Class  of  Sen-ice.) 

City. 

Rale  Quoted. 

City. 

Maximum  Rate. 

Minimum  Rate. 

Chicago  

$84.00 
9000 
72.00 
72.00 
63.00 

54.00 
48.00 
46.00 
48.00 

$228.00 
174.00 
180.00 
168.00 
100.00 

96.00 
13S.00 
8().00 
63.00 
72.00 

$48.00 
39.00 
60.00 
39.00 

48.00  (for  local 
service  only) 

50.00 
48.00 
40.00 
39.00 
42.00 

Philadelphia 

Qcveland   

San    Francisco    

Washington    

Cincinnati    

Buffalo    

Los  Angeles   

Indianapolis     

Denver 

Rochester   

Providence 

Wilmington  

Springfield  (Mass.)   . 
Sacramento 

San  Diego   

6.  Rate  schedules  can  be  considered  only  as  a  whole,  and  specific  rates  cannot  be  com- 
pared for  general  purposes.  The  comparison  quoted  by  Mr.  Lewis  contemplates  the  highest  grade 
of  service  only,  whereas  the  minimum  rate  for  business,  and  particularly  the  minimum  rate  for 
residence  service,  are  more  important.  The  error  of  Mr.  Lewis'  comparison  in  this  respect 
is  shown  by  the  following: — 

STATEMENT    OF   MINIMUM    RATES    IN    CERTAIN    CITIES    WHERE    MAXIMUM    RATES 

WERE  SHOWN   IN  THE  COMPARISON. 


CoMPETiTi\-E  Cities. 

NON-COMPETITIVE  CiTIES. 

City. 

Company. 

Minimum  Rates. 

Minimum  Rates. 

City. 

Business.    |  Residence. 

Business.  1    Residence. 

St.   Louis    

Bellt 
Ind. 

$36.00 
60.00 

$24.00 
24.00 

$36.00 
30.00  ' 

$24.00 
nd 

2100 

Boston 

Geveland    

Bell 
Ind.t 

42.00 
36.00 

18.00 
24.00 

24.00 

24.00 

Baltimore 

Buffalo 

Bell 
Ind.t 

42.00 
36.00 

24.00 
24.00 

12.00* 

1825 

San  Francisco 

Los  Angeles 

Bellt 
Ind.t 

3600 
36.00 

18.00 
18.00 

3000 
36.50 
27.37 

30.00 
18.25 
1825 

Washington 

Cincinnati 

Milwaukee 

Indianapolis    

Bellt 
Ind.t 

42.00 
42.00 

18.00 
24.00 

36.50 

1825 

Denver 

Rochester   

Bellt 
Ind.t 

42.00 
40.00 

24.00 
24.00 

£4.00 
27.38 

.   24.00 
18.25 

Seattle 

Providence 

\f  eiTiDhis 

Bell 
Ind.t 

48.00 
4«.00 

30.00 
30.00 

48.00 

18.00 

Oakland 



Wilmington    

Bell 
Ind.t 

36.00 
46.00 

24.00 
21.00 

48.00 
39.00 

24.00 
25.00 

Des  Moines 

Springfield  (Mass.) 

Bell 
Ind.t 

42.00 
42.00 

18.00 
24.00 

42.00 

18.00 

Sacramento 

Decatur  

Beli: 
Ind.: 

30.00 
30.00 

18.00 
18.00 

27.00 

12.00 

Burlington  (la.) 

*Ready  to  serve  charge.     Messages  5c.  each. 

tindicates  the  exchanges,  the  rates  of  which  are  used  in  the  comparison. 

:Thc  $3000  rate  shown  in  the  comparison  is  quoted  by  both  the  Bell  and  the  Independent  Companies 
for  party  line  service. 

It  has  not  been  possible  to  cover  all  the  details  of  Mr.  Lewis'  Tables  Nos.  12  and  13.  To  do 
this  would  require  a  long  and  technical  discussion,  not  warranted  in  this  paper  because  Mr.  Lewis 
apparently  does  not  attach  much  importance  to  the  tables,  so  far  as  government  ownership  is  con- 
cerned. However,  in  the  brief  analysis  given,  an  attempt  has  been  made  to  make  clear  that  the  sta- 
tistics as  to  Bell  rates  and  their  history  have  been  di'lortcd  before  they  reached  Mr.  Lewis'  hands, 
and  that  any  conclusions  drawn  therefrom  would  be  absolutely  erroneous.  This  analysis  may  be  briefly 
summarized  as  follows: 


43 

1.  The  statistics  used  bristle  with  direct  and  absolute  errors  of  vital  significance. 

2.  Bell  rates  have  not  been  increased  as  a  result  of  the  withdrawal  of  competition,  but. 
in  most  cases,  have  either  remained  unchanged  or  have  been  decreased. 

3.  The  comparison  given  in  Table- 13  includes  both  Bell  and  independent  rates,  although 
the  Tabic  purports  to  include  only  Bell  rates. 

4.  The  comparison  in  Table  13  cannot  be  significant  because  maximum  rates  only  are 
quoted,  because  flat  rates  and  message  rates  are  compared,  because  the  comparison  is  based 
upon  population  and  not  upon  the  number  of  telephones,  because  the  rates  of  one  class  of  service 
only  are  compared,  because  minimum  rates  are  not  considered,  and  because  the  most  important 
clement,  residence  rates,  is  disregarded. 


Assumptions  as  to  Toll  Rates. 

With   reference  to  telephone  toll  rates,   Mr.  Lewis  gives  the  following  table  of  average  toll 
receipts  per  toll  message: 

MR.  LEWIS'  TABLE  NO.  14. 

Average  charge,  interurban  (toll)  and  long-distance. 


Country. 


Rate. 


Luxemburg 
Germany  . . 
Switzerland 
Sweden  . . . 
France  .... 
Japan 


Norway   

Great  I3ritain  

Netherlands   

Italy    

United  States   (Bell  Co.). 

Denmark   

Belgium   

Hungary    

Austria 


$0,030 
.036 
.074 
.079 
.090 
.100 
.100 
.120 
.130 
.190 
.190 
230 
.230 
.260 
.280 


This  table  is  greatly  in  error  chiefly  on  account  of  the  duplication  in  the  counting  of  foreign  toll 
messages,  as  explained  on  pages  27,  28;  and  because  receipts  from  international  messages  must  be 
divided  between  the  systems  over  which  such  messages  pass.  On  the  basis  of  the  duplicatory  sta- 
tistics— the  only  ones  available  for  these  foreign  countries — the  table  is  substantially  correct,  except  as 
to  Luxemburg  and  Germany,  as  might  be  surmised  from  the  differences  between  Germany  and 
Switzerland  or  Austria,  adjacent  countries. 

In  Luxemburg,  of  course,  there  is  no  toll  or  interurban  service,  since  Luxemburg  is  merely 
a  single  exchange  in  itself.  The  figure  Mr.  Lewis  uses  can  obviously  be  only  a  prorate  from  inter- 
national  business,   or  receipts    from  local   exchange  calls  from  public  (pay)  stations. 

As  to  Germany,  Mr.  Lewis  has  evidently  used  the  number  of  calls  describer'  in  the  "Journal 
Telcgraphique"  as  "interurban"  calls,  amounting  in  1911  to  377,262,940,  or  almost  twice  the  corre- 
sponding number  in  the  Bell  System.  The  unsuitability  of  this  figure  for  Mr.  Lewis'  purpose,  though 
evident  on  the  face  of  it,  is  explained  in  detail  in  a  letter  from  tlie  German  Post  Office,  dated  Decem- 
ber 18,  1912,  stating  that  this  figure  "includes  conversations  in  suburban  service,  for  which  a  toll 
charge  is  not  made.  I  am  very  sorry  that  I  cannot  comply  with  your  request  to  state  the  real  num- 
ber of  interurban  calls  subject  to  special  charge  *  "■  ■*  as  no  special  statistics  on  this  point  are 
available." 

However,  as  the  United  States  ranks  with  a  lower  revenue  than  Denmark,  Belgium,  Hungary, 
and  Austria  in  this  table,  Mr.  Lewis  doubts  its  accuracy,  not  because  of  the  very  evident  inconsist- 
ency between  the  figures  for  the  foreign  countries,  but  because  he  questions  the  accuracy  of  the  Bell 
figure,  which,  however,  includes  the  long  distance  service,  without  duplications  either  in  revenue 
or  in  the  count  of  messages,  and  which  was,  in  1912,  $.201 — less  than  Mr.  Lewis  shows  for  the  four 
countries  named.  Nevertheless,  for  this  reason,  Mr.  Lewis  shows  the  following  table  of  rates  for  toll 
service,  intended  to  suggest  that  the  toll  rates  of  the  Bell  System  are  exorbitant : 


44 


MR.  LEWIS'  TABLE  NO.   15. 
Long-distance  tariffs. 


Country. 


(a)   Sweden 

(fc)  Norway 

(c)  France 

(<f)  Italy 

(e)  Belgium 

(/)  Denmark 

ig)  Japan 

(A)  New  Zealand 

(i)  Great  Britain ' 

(it)  Germany 

(/)  Australia 

(m)  .\ustria 

(n)  Hungary 

(o)   Russia 

(/■)   United  States   (Bell  Co.). 


100  miles.  I  3(X)  miles.  I     500  miles.      |  700  miles. 


$0.08 
.09 
.10 
.19 
.19 
.20 

2a 

24 
24 
.24 
.32 
.38 
.38 
.38 
.60 


(a)  $0.13 
(it)  24 
(fr)  .34 
(f)  .35 
(».)  .38 
(«)      .38 


(d) 
(/) 
(9) 
(o) 
W 
(/) 
(0 


.38 
.40 
.50 
.62 
.72, 
.80 
.84 


(/>)    1.80 


(o)    $0.20 
(t)        .36 


(m) 

(") 

(f) 

(/•) 

(ff) 


.38 
.38 
.53 
.60 
.82 
1.50 


(a)  $0.34 
(m)  .38 
(k)  .48 
(c)  .58 
(i7)  1.25 
(/)      126 


(^)      3.00  I  (/>)     420 


XoTE. — The  letters  preceding  the  name  of  each  country  are  used  to  identify  the  countries  to 
which  the  rates  given  for  300,  5(X),  and  700  miles  belong. 

Table  No.   15  is  incorrect  and  misleading  for  the  following  reasons: — 

1.  In   several   instances   there   are  important  errors  of  fact. 

2.  The  table  does  not  take  into  account  the  shorter  distances  which  are  the  more  im- 
portant. 

3.  The  comparison  does  not  take  into  account  important  aifferences  in  the  methods  of 
applying  the  unit  charges. 

4.  The  ser\-ice  given  in  the  foreign  countries  is  "two-number"  service,  whereas  the 
service  given  in  the  United  States  is  "particular  person"  service,  the  rates  for  which  should 
not  be,  and  are  not,  the  same  in  any  country  where  both  types  of  service  are  given. 

5.  The  comparison  covers  "ordinary"  service  only,  whereas  the  Bell  rates  cover  "urgent" 
or  express   service.     This  Mr.  Lewis  admits. 

6.  The  comparison  covers  domestic  sen  ice  only,  whereas  a  fair  comparison  should  include 
international  service. 

7.  The  comparison  does  not  take  into  account  dilTerences  in  the  cost  of  construction 
and  in  operating  wages. 

8.  The  comparison  does  not  take  into  account  differences  in  costs  due  to  differences 
in  the  character  of  service. 

9.  The    comparison   does    not   take    into    account    the    fact    that    toll    service    in    foreign 

countries  does  not  pay  for  its  cost. 

These  more  important  considerations,  in  a  comparison  of  foreign  and  American  toll  rates, 

are  discussed  in  detail  below: 

1.  ERRORS  OF  FACT. 

In  the  cases  of  Norway'"  and  France,""  Mr.  Lewis  has  confused  kilometers  with  miles, 
the  rates  in  both  cases  applying  to  1(X)  kilometers,  or  62.1  miles,  and  not  to  100  miles. 

As  to  Austria,  Mr.  Lewis  has  shown  a  rate  of  38  cents  for  all  distances,  whereas  the 
rates  are:    100  miles,  $.38;  300  miles,  $.61;  500  miles,  $.81."" 

In  Sweden  the  rate  for  500  miles  is  $.27,  not  $.20.'" 

In  Denmark  the  correct  rate  for  300  miles  is  554,  not  $.40.'" 

In  Japan  the  correct  rates  for  distances  of  500  and  700  miles  are  $.87  and  $1.12,  respec- 
tively, and  not  $.82  and  $1.25."'  ^     .  .         „„ 

In   New   Zealand  the  rate  quoted  by  Mr.  Lewis  for  500  miles  must  be  mcorrect.  smce 

it  is  lower  than  that  which  he  quotes  for  300  miles."* 

2.  THE  COMPARISON  DOES  NOT  COVER  SHORT  DISTANCES. 

The  rates  for  the  shorter  distances  are  obviously  and  necessarily  more  importarit  with 
reference  to  volume  of  traffic  than  those  for  the  longer  distances  in  every  country,  both  because 
the  rates  for  the  longer  distances  are  the  higher,  and  because  the  natural  social  and  economic 
interests  are  closest  with  nearby  places.  This  is  easily  to  be  seen  from  Mr.  Lewis  l^'^JNo 
14,  where  in  most  cases  the  average  revenue  per  conversation  is  far  below  the  rate  for  lUU  miles. 


45 


3.  METHODS   OF  APPLYING   UNIT   CHARGES 

The  American  rates  are  for  an  initial  period  of  tiiree  minutes.  For  longer  conversations 
the  rates,  for  each  additional  minute,  are  about  one-third  of  the  initial  rate.  The  foreign  rates 
are,  in  nearly  all  cases,  as  Mr.  Lewis  states,  for  an  initial  period  of  three  minutes;  but  over- 
time is  charged  for  at  the  initial  rate  for  each  additional  three  minutes  or  fraction  thereof. 
This  is  a  very  important  difference  in  rates,  since  a  very  considerable  number  of  conversations 
extend  beyond  three  minutes,  but  less  than  four  minutes  or  five  minutes. 

4.  FOREIGN  RATES  ARE  FOR  "TWO-NUMBER"  SERVICE  ONLY. 

The  rates  which  Mr.  Lewis  quotes  for  foreign  countries  are  for  a  service  generally 
known  in  the  United  States  as  "two-number"  service.  Under  this  type  of  service,  the  subscriber 
orders  connection  with  a  specified  telephone,  either  by  giving  the  telephone  number  and  exchange, 
or,  in  some  cases,  by  giving  the  name  of  the  subscriber  and  his  exchange,  in  which  case  the 
designation  of  a  subscriber  by  name  is  merely  to  aid  in  locating  the  particular  telephone  desired ; 
and  when  that  telephone  is  secured,  regardless  of  wlio  answers,  the  connection  is  established 
and  the  conversation  is  cliarged  for  from  the  time  the  telephones  are  connected.  In  the  United 
States  this  type  of  service  is  given  only  for  very  short  distances  (usually  not  more  than  20  miles). 

The  "particular  person"  service,  which  is  the  type  of  service  in  general  use  in  the  United 
States  and  which  is  the  only  service  given  beyond  short  distances,  differs  from  the  "two-num- 
ber" service  in  that  the  calling  subscriber  orders  arrangements  for  a  conversation  with  a  particular 
person ;  and  no  charge  is  made  unless  conversation  is  actually  had  with  the  specified  person. 

The  differences  in  these  types  of  service  are  exceedingly  important  in  relation  to  rates ; 
for  in  the  case  of  "two-number"  service,  the  calling  subscriber  pays  for  the  time  required  to 
secure,  or  in  attempting  to  secure  the  particular  person  desired;  whereas  no  charge  is  made, 
under  the  "particular  person"  method,  unless  the  person  requested  is  obtained.  Moreover,  if  the 
particular  person  desired  is  not  available  at  the  time  and  at  the  station  called,  the  call  is  in 
very  many  cases  useless  to  the  subscribers  calling,',  under  tlie  "two-number"  method,  although  it 
must  be  paid  for. 

It  is  obvious  that  wlieii  the  "particular  person"  method  is  used,  a  considerable  amount  of 
time  on  the  part  of  operators,  as  well  as  a  considerable  amount  of  circuit  time,  is  consumed  in 
obtaining  particular  persons,  so  that  the  costs  per  call  are  higher.  As  to  circuit  use,  this  time 
is  charged  for  as  a  part  of  the  conversation  under  the  two-number  method,  and  under  this  method 
a  part  of  the  operator's  work  is  transferred  to  the  subscriber. 

In  some  countries,  for  example,  in  France  and  Great  Britain,  there  is  no  provision  what- 
ever for  the  handling  of  particular  person  calls.  In  other  countries,  for  example,  Sweden,  Nor- 
way, Denmark,  Germany,  and  Au.stria,  a  special  charge  is  made  for  "particular  person"  service. 
A  statement  of  these  charges  ("varying  according  to  distances  covered)  and  their  relation  to  the 
regular  toll  charge  for  three  minutes  follows : 


Norway" 


Additional 

Charge   for 

Particular  Person. 

Cents. 

Charge  for 

Initial  Period 

I  Ordinary  Rates). 

Cents. 

% 

Additional 

Charge  to 

Charge  for 

Initial   Period. 

1.34 
2.68 
2.68 
5.36 
5.36 
5.36 
5.36 

4.0 
67 
9.4 
13.4 
201 
26.8 
33.5 
400 

* 

20 
28 
20 
27 
20 
17 
13 

*No  "particular   person"   service. 


Surd,;,"' 


Additional 

Charge  for 

Particular  Person. 

Cents. 

Charge  for 

Initial  Period 

(Ordinary  Rates). 

Cents. 

% 

Additional 

Charge  to 

Charge  for 

Initial   Period. 

6.7 
6.7 
6.7 
6.7 
6.7 
6.7 
6.7 
6.7 
6.7 

4.0 
80 
13.4 
20.0 
26.8 
335 
40.0 
47.0 
53.6 

167.0 
84.0 
50.0 
33  5 
25.0 
20.0 
17.0 
140 
12.5 

46 

Denmark.  The  charge  for  "particular  person"  service  is  6.7  cents.  The  initial  rates  vary 
from  6.7  cents  to  53.6  cents.  The  "particular  person"  rate  is,  therefore,  from  lOO^o  to  12.5% 
higher  than  the  two-number  rate.*" 

Grrtfuviy.  The  charge  for  "particular  person"  service  is  5.95  cents  in  addition  to  the 
regular  rates.  As  the  rates  vary  from  4.76  cents  to  47.6  cents,  the  "particular  person"  rate  is 
from  125%  to  12.5%  higher  than  the  "two-number"  rate.'" 

Austria.  The  charge  for  "particular  person"  service  is  6.1  cents  in  addition  to  regular  rates. 
As  the  rates  vary  from  6.1  cents  to  81.2  cents,  the  "particular  person"  rate  is  from  1007o  to  7.5% 
higher  than  the  "two-number"  rate.""* 

In  the  United  States  the  "particular  person"  rates  are  ordinarily  5  cents  higher  than  the 
"two-number"  rates  at  short  distances  ( from  5  to  20  miles'),  and  are  from  30%  to  20^0  higher 
than  the  "two-number"  rate  for  longer  distances  in  the  few  cases  where  "two-number"  service 
(optional)  is  given. 

It  will  be  seen  from  the  above  that  for  distances  up  to  30  miles  the  "particular  person"  rate 
in  Europe  is  about  100%  higher  than  the  "two-number"  rate :  and  that  for  greater  distances  the 
"particular  person"  rate  is  not  less  than  about  127r  higher  than  the  "two-number"  rate.  It  is  a 
fact  that  in  comparing  American  toll  rates  with  foreign  rates,  when  no  specific  "particular  per- 
son" charge  is  stated,  an  amount  equal  to  100%  of  the  ordinary  rate  for  the  three  minutes  may 
be  'added  with  propriety  for  distances  from  25  miles  to  50  miles,  and  an  amount  equal  to 
25%  should  be  added  for  greater  distances. 

Mr.  Lewis'  comparison  is,  therefore,  misleading  in  that  the  rates  compared  are  not  for 
the  same  kind  of  service.  In  this  connection  it  should  be  noted  that  for  the  longer  distances 
in  the  United  States,  when  both  "particular  person"  and  "two-number"  service  are  given  (for  ex- 
ample, New  York- Philadelphia),*  the  very  great  majority  of  messages  pass  at  the  "particular 
person"  rate,  although  it  is  25%  higher  than  the  "two-number"  rate.  This  will  indicate  roughly 
to  what  extent  subscribers  in  France  and  Great  Britain,  for  example,  may  be  burdened  with 
c'arges  for  unavailing  calls  under  the  "two-number"  system  (i.  e.,  in  cases  when  the  particular 
person  desired  is  not  obtained  after  the  connection  is  established). 

5.  THE  COMPARISON  COVERS  ORDINARY  SERVICE  ONLY. 

As  in  the  case  of  the  comparison  of  telegraph  rates,  Mr.  Lewis  has  omitted  the  "urgent" 
or  preferential  foreign  toll  rates.  His  excuse  for  so  doing  is  that  there  is  no  preferential 
rate  in  the  United  States — "the  day  charge  is  all  the  same  and  one  has  to  wait  his  turn  despite 
the  rate."  This  is  not  true,  because  there  is  normally  no  waiting.  The  average  time  elapsing 
from  the  filing  of  the  order  for  a  long-distance  conversation  until  the  completion  of  the  con- 
nection is  not  in  excess  of  5'/2  minutes;  whereas  the  delay  in  foreign  countries  on  "ordinary" 
conversations  is  often  from  one  to  several  hours — in  some  cases  "ordinary"  conversations  can- 
not be  obtained  except  early  in  the  morning  or  late  in  the  afternoon.  Facts  concerning  the 
delays  in  service  in  forei.gn  countries  are  given  on  pages  47-49  following.  It  should  be  noted 
here,  however,  that  Mr.  Lewis  should  have  based  his  comparison  on  the  "urgent"  rates  of 
foreign  countries,  which  apply  to  the  only  service  which  even  approximates  that  given  in 
the  United  States. 

6.  THE  COMPARISON  COVERS  DOMESTIC  RATES  ONLY. 

Again,  as  in  the  case  of  telegraph  rates,  Mr.  Lewis  has  omitted  any  comparison  of  inter- 
national rates,  even  in  quoting  the  rates  of  countries  so  small  in  size  that  there  are  only  a  few, 
if  any,  long  hauls  except  those  which  are  intemational. 

Mr.  Lewis  has,  then,  in  his  comparison  omitted  any  factor  compensating  for  the  differ- 
ences between  "particular  person"  and  "two-number"  service ;  has  omitted  any  indication  of  the 
differences  in  methods  of  charging  for  overtime;  has  omitted  "urgent"  rates;  and  has  omitted 
international  rates.  A  study  of  foreign  domestic  toll  rates  in  which  some  of  these  factors  are 
taken  into  consideration  shows  that,  in  terms  of  currency,  the  American  rates  are  lower  for 
short  distances  than  the  foreign  ordinary  rates;  that  they  are  lower  than  the  foreign  urgent 
rates  at  25  miles;  and  arc  lower  for  four  minute  urgent  conversations  up  to  at  least  100  miles. 
In  view  of  the  fact  that  the  very  heavy  toll  traffic  normally  and  naturally  is  confined  within  radii 

♦This  is  the  longest  two-number  service  haul  in  effect  in  the  United  States. 


47 

of  from  35  to  50  miles,*  these  facts  are  of  great  importance,  for  obviously  the  foreign  govern- 
ments could  afford  to  carry  long-distance  traffic  at  great  losses  if  the  charges  on  the  short  dis- 
tance traffic  were  unnecessarily  high,  which  is  clearly  the  fact.  (See  Appendix  G.)  Inasmuch 
as  the  international  rates  are  higher  than  the  domestic  rates,  it  is  obvious  that  for  all  hauls 
within  a  moderate  distance  the  international  rates  must  be  very  much  higher  than  the  Ameri- 
can rates.  Thus,  the  German  domestic  rate  for  "two-number"  service  up  to  15  miles  is  about  5 
cents;  but  for  the  same  distance  across  the  Austrian  border  it  is  about  12  cents,  or  about  1409o 
higher.'"  Similarly,  the  domestic  rate  in  Belgium  is  19.3  cents;  but  across  the  French  border, 
even  if  the  distance  were  only  5  miles,  the  rate  would  be  increased  to  29  cents  (ordinary  serviced, 
which  will  cover  a  conversation  of  from  35  to  45  miles  in  the  United  States.''^  Again,  the  rate 
between  border  towns  of  France  and  Gcnuany  is  about  24  cents."-  These  rates  are  so  clearly 
far  higher  than  American  rates  for  these  short  hauls  that  considering  the  natural  volume  of 
short  haul  traffic,  the  rates  for  long  diS'lances  could  be  reduced  to  almost  nothing,  and  the  inter- 
national toll  service  as  a  whole  could  still  be  profitable. 

7.  THE    COMPARISON    DOES    NOT    TAKE    INTO    ACCOUNT    DIFFERENCES    IN 
COSTS. 

Mr.  Lewis  distinctly  disclaims  that  any  differences  in  prices  of  materials  and  labor  should 
be  taken  into  account,  because  it  is  his  opinion  that  the  prices  of  copper  and  poles  are  higher 
in  Europe  than  in  the  United  States  by  the  cost  of  transportation  to  Europe;  and  because  he 
believes  that  the  cost  of  copper  and  noles  are  the  chief  items  of  toll  plant  cost.  In  this  opinion 
Mr.  Lewis  is  greatly  in  error,  because  pole  timber  in  Europe  is  not  imported  from  the  United 
States,  because  the  difference  in  the  price  of  copper  is  only  about  7  cents  per  100  pounds:,  and  be- 
cause the  cost  of  poles  and  copper  constitutes  only  a  part  of  the  total  cost  of  toll  lines.  The 
cost  of  copper  and  poles  is  only  45^  of  the  total  cost  of  toll  lines  in  the  Bell  System  and 
only  14^  of  the  cost  of  total  telephone  plant.  The  remainder  of  the  cost  consists  of  labor 
expense  and  the  cost  of  manufactured  material,  in  which  labor  cost  is  a  large  element. 

As  is  generally  known,  labor  costs  are  much  less  in  Europe  than  in  the  United  States, 
so  that  it  is  fair  to  state  that  toll  lines,  when  economically  constructed,  must  cost  less  in  Eu- 
rope than  in  the  United  States.  However,  plant  charges  are  not  the  only  item  in  the  cost  of 
toll  service,  and  for  the  shorter  hauls  the  cost  of  operating  labor  and  the  charges  on  terminal 
plant  constitute  a  very  important  item  of  cost;  so  that,  particularly  as  to  the  shorter  hauls, 
the  cost  of  service  generally  corresponds  to  the  wage  level  and  the  relative  value  of  money. 

A  comparison  of  operators'  wages  is  a  fair  index  of  relative  costs,  or  of  the  value  of  money, 
and  ought  to  be  taken  into  consideration  not  only  in  connection  with  exchange  rates  but  also  in 
connection  with  toll  rates.  For  this  reason,  the  toll  rates  in  various  countries  have  been  equated 
on  the  basis  of  relative  operators'  wages,  as  shown  in  Appendix  E,  and  a  comparison  of  equated 
toll  rates  given  in  Appendix  G,  Table  II.  This  comparison  shows  clearly  that  the  Bell  toll  rates 
are  lower  than  the  foreign  deferred  rates  at  least  for  distances  up  to  one  hundred  miles;  and 
that  they  are  lower  even  at  two  hundred  miles  than  the  foreign  rates  for  four  minute  conver- 
sations. When  the  comparison  is  made  between  the  American  rates  and  the  foreign  preferred 
rates,  which  do  not  cover  a  service  as  good  as  that  given  in  the  United  States,  it  is  found  that 
the  American  rates  are  lower  for  all  distances. 

8.  THE  COMPARISON  DOES  NOT  CONTEMPLATE  DIFFERENCES  IN  CHARACTER 

OF  SERVICE. 

From  a  cost  standpoint  alone,  a  comparison  of  toll  rates  should  take  into  account  the 
differences  properly  assignable  to  variations  in  the  character  of  loll  service  given.  The  import- 
ance of  the  difference  between  "two-number"  and  "particular  person"  toll  service,  in  comparisons 
of  toll  rates,  has  already  been  discussed;  but  a  difference  in  the  character  of  service,  with  respect 
to  delays  in  completion  of  connections,  is  of  equal  if  not  of  greater  importance.  The  following 
are  a  few  pertinent  facts  illustrating  the  character  of  government  toll  service: 

♦At  least  75%  of  the  toll  traffic  of  the  United  States    falls    within   this    distance.     This   is   true   also   of 
foreign  countries.     For  example,  in  Switzerland  over  70%  of  the  toll  traffic  is  of  less  than  30  miles  haul."" 


4J^ 


GREAT  BRIT.-\i\— DIRECT  CIRCUITS." 
London-Paris 

Average   length    of    time    from   filing 

of  long  distance  order  to  completion  of 

connection. 

Ordinary    Messages.    |    Preferred    Messages. 

1  hour 
20  mins. 
30  mins. 

30-40  mins. 

30-40  mins. 
15  mins, 
20  mins. 

20-30  mins. 

.30-40  mins. 

30-40  mins 

■ 

No  Preferred 
Service. 

45  mins. 

15  mins. 

1  hour 

lyi  hours 

Preferred  Service 
not  stated. 

London-Brussels  

London-Leeds    

London-Sheffield  

London- Nottingham    

London-Glasgow  

London-Liverpool    

London-Bristol    

London- Manchester   

London-Birmingham   

SWEDEX-DIRECT  CIRCUITS."" 

Stockholm-Malmo 

45  mins. 
2  hours 
...  .a 

10  mins.  1 
32  mins.   1 
35  mins.   | 

Stockholm-Gefle    

Stockholm-Lulea  

Stockholm-Gothenburg  

GERMANY-DIRECT  CIRCUITS."* 

Berlin-Budapest    

Berlin-Cologne    

Berlin-Frank  fort  

Berlin-Paris   

»The  lines   are  so  occupied  that  ordinary  conversations  can  be  had  only  early  in  the  morning  or  late 
in  the  afternoon. 

The  following  quotation  from  a  speech   in  the   Reichstag  confirms  these   statistics  as   to 
present  conditions  in  Germany: 

"Thus,  complaint  is  made  of  the  long  time  that  a  subscriber  must  wait  in  order  to  get  long 
distance  connections,  especially  connections  between  the  West  and  the  more  central  parts  of  the  country, 
and  in  particular  between  Dusseldorf  and  Berlin.  For  years  the  Imperial  Post  Office  has  been  acquainted 
with  these  complaints.  In  1907  the  Dusseldorf  Chamber  of  Commerce  made  an  investigation  and  found 
that  the  waiting  time  exceeded  two  hours.  In  1910  it  was  proved  that  the  average  lime  of  waiting 
to  be  connected  by  telephone  service  between  Dusseldorf  and  Berlin*  was  still  over  one  hour,  and  the 
average  time  between  Dusseldorf  and  Mannheim,  Dortmund,  and  Cologne  was  forty-four,  thirty-nine, 
and  thirty-four  minutes,  respectively.  Later,  conditions  again  grew  worse.  The  average  time  required 
to  get  a  connection  with  Berlin  is  now  I'A  hours.  According  to  reports  from  a  number  of  firms  if  the 
operator  be  requested  to  get  Berlin,  the  general  reply  is  that  unless  the  conversation  is  classified  as 
'urgent,'  the  connection  will  take  several  hours.  In  fact,  the  Administration  recommends  a  scheme  of 
'urgent'  conversations  to  overcome  the  trouble.""* 
♦About  400  miles. 

DENMARK. 

minutes."' 


Average    waiting    time    for  all  lines  (maxinuim  distance  100  miles)    14J4 


FRANCE.  Officially  reported  complaints  of  Chambers  of  Cominerce  concerning  delays 
in  toll  service:'" 

Chamber  of  Commerce  of  Alais  (population  25,000) : 

"As  regards  telephone  communications,  for  example,  several  business  houses  have  reported  that  it  has 
been  impossible  on  several  occasions  to  obtain  connections  with  Marseilles  (85  miles)  and  Lyons  (115  miles), 
even  after  uailing  four  hours." 

Chamber  of  Commerce  of  Chambery  (population  23,0(X)) : 

"Telephone  communications  with  Geneva  (SO  miles),  Lyons  (60  miles).  Paris  (280  miles),  Grenoble 
(30  miles),  are  practically  impossible  during  the  greater  part  of  the  year,  and  it  is  necessary  to  wait  hours 
for  a  connection.     In  the  case  of   Paris,  the  connection  is  obtained  the  day  after  the  call  has  been  filed. 

Chamber  of  Commerce  of  Rouen  (population  125,000): 

"At  the  head  of  the  reforms  which  we  would  like  to  see  realized  we  place  the  improvement  of  the  tele- 
graph service,  and  especially  the  improvement  of  the  telephone  service,  which  still  leaves  much  to  be  desired. 
It  Ukes  an  average  of  55  minutes  to  secure  a  connection  with  Paris  (70  miles)." 

UNITED  STATES.  The  average  time  required  to  complete  a  long  distance  connection  on 
the  lines  of  the  American  Telephone  and  Telegraph  Company  (unless  the  particular  person  de- 
sired cannot  be  located)  is  less  than  6>^  minutes  from  the  time  the  subscriber  files  the  order. 
On  "two-number "  service,  the  type  of  service  given  by  all  the  governments,  the  average  time  be- 
tween New  York  and  Philadelphia  is  about  70  seconds. 


49 

The  complaints  of  the  Chambers  of  Commerce  in  France  (only  a  few  are  quoted  above) 
indicate  very  clearly  the  cause  of  the  foreign  delays,  and  the  relation  of  the  cause  to  the  cost 
of  service.  These  Chambers  of  Commerce  state  that  the  government  does  not  establish  enough 
circuits  to  carry  the  business  promptly,  and  repeatedly  urge  the  placing  of  an  adequate  num- 
ber of  circuits.  In  some  cases,  the  Chambers  of  Commerce  have  actually  paid  the  govern- 
ment the  entire  cost  of  placing  additional  circuits  to  handle  the  business,  just  as  in  the  case 
cited  hereinbefore  public  subscriptions  were  required  to  pay  for  night  exchange  service. 

The  great  delays  in  foreign  toll  ser\'ice  are  largely  the  result  of  insufficient  plant.  It 
is  the  policy  and  practice  of  the  Bell  Companies  to  establish  plant  in  accordance  with  the  re- 
quirements during  the  hours  of  heavy  traffic,  so  that  a  rapid  telephone  service  is  given  at  all  hours. 
This,  of  course,  results  in  the  limited  use  of  costly  circuits;  whereas  the  foreign  method,  if 
operating  is  equally  efficient,  by  spreading  the  traffic  over  a  number  of  hours  through  enforced 
delay,  results  in  a  very  high  utilization  of  plant,  but  a  very  low  efficiency  of  service. 

9.     TELEPHONE  TOLL  SERVICE  DEFICITS. 

Not  only  are  the  foreign  toll  rates  higher  than  the  American  toll  rates,  but  even  with 
the  really  higher  rales,  the  foreign  toll  service  in  many  cases  does  not  yield  enough  revenue 
to  cover  its  cost.  This  is  true  at  least  of  Switzerland,  Bavaria,  Australia,  and  New  Zealand,  as 
shown  by  the  following  facts : 

Switzerland.  An  official  investigation  has  disclosed  that  in  1909  the  toll  service 
resulted  in  a  deficit  of  6^  of  the  toll  receipts.'" 

Bavaria.  The  loss  on  the  toll  service  of  Bavaria  was  250,000  marks  in  1908.  (See 
Appendix  D.^ 

Australia.  Excepting  the  Sydney-Melbourne  trunk  line,  the  toll  ser\-ice  of  Australia 
produced  a  loss  of  i54,112  (about  $263,000)  in  the  fiscal  year  ending  June  30,  1913;  and,  includ- 
ing the  Sydney-Melbourne  service,  about  £51,325  (approximately  $250,000).  This  loss  was 
equal  to  about  35%  of  the  toll  revenue."*" 

New  Zealand.     The  telegraph  and  toll   telephone  services  combined   result   in  a  deficit 
•    of  about  23^0  of  the  telegraph  and  toll  revenues.     (See  Appendix  D.) 

C.     AS  TO   THE    SOCIAL  INEFFICIENCY    OR  INADEQUACY    OF  PRIVATE  TELEPHONE 

SYSTEMS. 

Mr.  Lewis  states,  in  edect,  that  the  deterrent  influence  of  high  rates  has  prevented  a  develop- 
ment of  the  telephone  business  in  the  United  Stales  and  that  this,  in  itself,  results  in  lower  efficiency  of 
personnel  than  governments  obtain.  Me  therefore  estimates  that  the  government  could  secure  an 
enormous  increase  in  traffic  willi  its,  presumably,  lower  rales.  It  has  been  shown  in  the  preceding  pages 
that  the  efficiency  of  the  American  telephone  service  is  not  relatively  low ;  that  .American  rates  for  tele- 
phone service  are,  in  fact,  lower  than  those  of  the  government  systems ;  and  it  is  now  submitted  that  the 
American  telephone  service  is  the  most  fully  developed  and  is  the  most  adequate  in  the  world.  Mr. 
Lewis'  ultimate  proof  of  his  contentions  as  to  institutional  efficiency  and  as  to  rates  rests,  as  he 
affirms,  on  the  relative  development  of  the  service.  This  test  of  Mr.  Lewis'  reasoning,  and  of  his 
facts  as  well,  is  accepted  not  only  for  purposes  of  discussion,  but  as  fundamentally  sound ;  for  it  is  a 
matter  of  experience  in  the  telephone  business,  as  in  other  busines.ses,  that  when  rates  are  high  or 
service  is  inefficient,  the  use  of  the  service  is  restricted;  and  that  when  rates  are  low  and  service  is 
efficient,  the  use  of  liie  service  is  high.  The  issue  is,  therefore,  squarely  joined  on  the  facts  con- 
cerning the  relative  development  of  telephone  service  under  private  ownership  and  under  govern- 
ment operation.  Mr.  Lewis'  only  statistics  directly  bearing  upon  the  development  of  telephone  serv- 
ice are  the  following: 


50 


MR.  LEWIS'  TABLE  NO.  16. 
Long-distance  com-crsalions  per  phone. 


Country. 


N'limbcrof    | 
conversations. 


Rank. 


Denmark   

Netherlands    

Denmark  (private) . 

Germany    

Sweden    

Russia    

Norway    

Switzerland      

France   


Norway   (private). 
Italy    (private).... 

Japan    

Italy 


United  States  (1912,  Bell). 

Belgium  

Austria 

Hungary   


761 
634 
348 
301 
150 
142 
135 
130 
125 
109 
73 
69 
62 
48 
44 
37 
34 


3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 


This  comparison  is  intended  to  include  what  is  known  in  the  United  States  as  "toll  and  long 
distance"  conversations.     It  is  in  error  for  the  following  reasons: 

1.  The  statistics  of  toll  conversations  are  erroneous,  because  in  Germany  local  trunked 
calls  are  included  as  "toll"  and  the  Administration  cannot  give  the  statistics  of  toll  messages; 
because  in  most  foreign  countries  messages  are  counted  by  rate  periods  and  not  by  actual  conver- 
sations; and  because  international  messages  are  counted  twice.  These  errors  are  discussed  in 
connection  with  Table  No.  14.  page  43. 

2.  Statistics  of  toll  or  interurban  conversations  cannot  be  significant  as  to  the  develop- 
ment of  toll  service  when  related  to  the  number  of  telephones.  It  is  obvious  that  the  greater 
the  development  of  local  telephone  service,  the  greater  the  proportion  of  subscribers  of  restricted 
means,  and  of  subscribers  whose  social  or  business  circles  are  naturally  limited  to  relatively  small 
spheres.  When  telephone  seirice  is  largely  confined,  as  it  is  in  the  government  systems,  to  the 
merchants  and  larger  houses  and  to  the  more  prosperous  residences,  the  number  of  toll  con- 
versations per  telephone  would  be  likely  to  be  high  as  against  that  in  a  system  where  the  tele- 
phone was  used  by  small  business  houses  and  in  residences  of  all  classes.  As  will  be  shown  below, 
the  development  in  telephones  is  so  much  greater  in  the  United  States  than  in  foreign  countries 
that  it  might  be  expected,  although  this  is  not  the  fact,  that  the  number  of  toll  conversations  per 
telephone  in  the  United  States  would  be  lower  than  in  those  countries. 

For  these  reasons  it  is  more  significant  to  state  the  number  of  toll  messages  per  capita,  and 
this  method  is  analogous  to  Mr.  Lewis'  method  of  measuring  telegraph  traffic  development  and  mail 
development. 

With  moderate  allowance  for  duplication  in  counting  messages  in  foreign  countries,  the  inter- 
urban and  long  distance  toll  traffic  in  the  several  countries   is  as    follows:'"" 


51 


Country. 


Austria 

Belgium  

Denmark*   

France  (1911J... 
German    Empiref 
Great    Britain 
Hungao'  (1911). 

Italy  (1910) 

Netherlands    

Norway   

Sweden 

Switzerland  

New  Zealand  . . . 

Australia  

United  States. .. . 


Population 
in  Thousands. 

Interurban 
Toll  Conversations 

P 

er  Lapifa. 

29,056 

.17 

7,570 

.26 

39,601 

.71 

46',i22 

.78 

21,050 

.09 

34,452 

.10 

6,078 

.82 

2,422 

3.74 

5,604 

3.25 

^      Maximum  possi- 

3,841 

2.58 

ble.      Obtained    by 

1,071 

.61. 

dividing  toll  reve- 
nue  by   the   mini- 
mum rate. 

4,669 

.70 

96.299 

3.36 

♦Denmark  not  included,  as  it  is  believed  that,  in  addition  to  the  ordinary  European  "pad- 
ding" by  using  rate  periods  and  counting  inward  and  transit  international  messages,  there  is  the 
same  type  of  duplication  in  counting  messages  between  the  private  companies,  and  between  the 
private  systems  and  the  government  system,  and  between  two  companies  over  the  government 
system.  There  is  no  doubt,  however,  that,  due  to  the  development  by  private  companies,  the  traffic 
is  higher  than  elsewhere  in  Europe. 

fThe  .Administration  states  that  no  figure  can  be  given  and  that  those  quoted  in  the  "Journal 
Telegraphique"  include  free  inter-office  trunk  calls  in  suburban  traffic — in  addition  to  duplications  in 
counting. 

It  will  be  seen  from  the  above  that  with  the  most  conser/ative  corrections  in  the  foreign  sta- 
tistics, and  wii'ii  a  moderate  estimate  of  traffic  for  non-Bell  Companies  in  the  United  States,  the 
development  of  toll  traffic  in  the  United  States  is  exceeded  only  by  that  of  Norway,  where  the 
statistics  as  to  private  companies  and  the  state  system  may  be  subject  to  duplication.  Probably  the  de- 
velopment in  Denmark  approaches  that  in  the  United  States.  It  should  be  noted,  however,  that  the  only 
countries  in  which  the  development  of  interurban  toll  traffic  is  approximately  as  high  as  that  of  the 
United  States  are  those  in  which  a  very  large  part  of  the  telephone  business  is  conducted  by  private  com- 
panies— in   Norway,  Sweden,  and  Denmark. 

Not  only  is  the  development  of  interurban  toll  and  long  distance  traffic  in  the  United  States 
higher  than  that  under  exclusively  government  operation,  but  the  development  of  the  local  service,  which 
is  relatively  of  much  greater  importance  in  the  United  States,  is  not  even  approached  in  any  other 
country  of  the  world.  Mr.  Lewis  has  given  no  statistics  as  to  local  telephone  development ;  but  his 
conclusions  as  to  institutional  efficiency  and  as  to  local  rates  are  most  conclusively  proven  in  error  by 
local  development  statistics. 

There  are  two  ways  of  showing  the  development  of  local  service:  first,  to  state  local  traffic  in 
relation  to  population;  and,  second,  to  state  the  number  of  telephones  in  relation  to  population.  The 
first  method  indicates  the  actual  use  made  of  the  telephone,  but  does  not  properly  account  for  the 
important  factor  of  emergency  service.  The  second  shows,  in  a  general  way,  the  utility  of  the 
telephone  to  the  people,  including  its  emergency  or  "insurance"  service,  without  directly  indicating  its 
actual  use  in  messages.  Both  methods  of  indicating  local  telephone  development  should  be  used  in 
order  to  give  a  complete  statement  of  the  facts. 


Statistics  as  to  total  telephone  traffic  have  been  given  in  connection  with  the  discussion  of  Mr. 
Lewis'  Table  No.  6,  page  21.  Inasmuch  as  the  interurban  traffic  per  capita,  as  shown  above,  is 
small,  for  general  purposes  a  statement  of  total  telephone  traffic  per  capita  will  indicate  the  develop- 
ment in  local  traffic.  For  this  reason,  the  statistics  given  hereinbefore  as  to  total  telephone  traffic 
per  capita  are  repeated  below : 


52 


Country. 


Operated  by. 


United  Staics. 

Denmark  

Sweden 

Norway   

Germany  . . . . 
Netherlands  . 
Great  Britain. 
Lii.xcmburg  . . 

Belgium  

Switzerland    . 

Austria 

Italy 

Hungary  .  .  .. 
France;    


TrafTic  per  Capita.   %  of  U.  S. 


Private 

Private* 

Gov.  and  Private 

Gov.  and  Pri\-ate 

Government 

Governmentt 

Gov.  and  Mun. 

Government 

Government 

Government 

Government 

Gov.  and  Private 

Government 

Government 


161.99 

8U>4 

77.47 

7000 

34.89 

27.92 

23  81 

18.45 

1823 

17.85 

12.55 

9.93 

9  59 

8.36 


100.0 

50.0 

47  8 

43.2 

21.5 

17.2 

14.7 

11.4 

112 

110 

7.1 

6.1 

5.9 

5.2 


♦Less  than  2%  of  local  operation  is  government. 

tincluding  municipal.     There   is  a   small  amount  of  private  operation. 

No  Statistics  are  published  for  New  Zealand. 

In  Australia  the  development  in  1910  was  about  40  per  capita;  but  since  then  exclusively  mes- 
sage rate  schedules  have  been  adopted  in  all  exchanges,  so  that  it  is  probably  much  less  than  40  at 
the  present  time. 

These  statistics  of  traffic  development  require  no  special  comment,  except  that  the  foreign 
statistics  are  very  greatly  inflated,  as  is  clearly  shown  hereinbefore,  pages  27-29.  In  passing,  it  may 
be  noted  that  the  development  in  the  United  States  is  more  tlian  four  times  that  of  any  country  in 
which  there  is  exclusively  government  operation.  It  is,  of  course,  a  matter  of  conjecture  as  to  what 
the  development  in  Denmark  would  !iave  been  if  private  concerns  had  been  permitted  to  establish  a 
complete  system. 

Although  the  statistics  of  traffic  development  are  very  significant  in  connection  with  Mr. 
Lewis'  general  argument,  those  of  station  (i.  e.,  telephone)  development  are  even  more  so.  These  are 
shown  below  in  two  tables,  the  first  giving  the  general  development  by  countries ;  and  the  second,  giv- 
ing the  relative  development  in  some  of  the  principal  cities  of  the  world. 


TOTAL  TELEPHONES  IN  SERVICE  AND  NUMBER  OF  TELEPHONES   PER  100  POPU- 
LATION IN  VARIOUS  COUNTRIES,  JANUARY  1,    1913."" 


Country. 

Operated  by. 

No.  of 
Telephones. 

Telephones  per 
100  Population. 

%  of  U.  S. 
Development 

Uniterl  States      

Private 

Private* 

Government 

Gov.  and   Private 

Gov.  and   Private 

Government 

Govcrnmetit 

Government 

Government 

Government 

Governmentt 

Government 

Government 

Government 

Government 

8,975,074 
118.398 

42.934 
217.554 

75,000 
121.020 

90.573 

1,302.672 

738.738 

3,910 

77,195 

58,640 
293.195 
161.230 

75,738 

9.1 
4.2 
4.0 
3.9 
3.1 
2.6 
2.3 
1.9 
1.6 
1.5 
1.3 
0.8 
0.7 
0.5 
0.4 

100.0 

46.2 

44.0 

42.9 

34.1 

28.6 

25.3 

20,9 

17.6 

16.5 

14.3 

8.8 

7.7 

S.S 

4.4 

Denmark                

Sweden 

Australia        

Switzerland   

Luxemburg 

Beluiiim      

France     .         

Austria                    

Hungary 

*Some  government  operation. 

fSome  private  operation.    Largely  municipal. 


53 


STATEMENT   SHOWING  COMPARATIVE  TELEPHONE  DEVELOPMENT 
IN    PRINCIPAL   CITIES   IN   THE  UNITED   STATES  AND  IN   OTHER   COUNTRIES 

JANUARY   1,   1913. 


UNITED  STATES. 

OTHER  COUNTRIES." 

Gty. 

Population. 

Bell 
Telephones 
per  100 
Population. 

Total 
Telephones 

per   100 
Population. 

Population. 

City. 

Operated  by. 

New    York,    N.    Y 

Chicago,    111 

Philadelphia,  Pa 

5,270,000 

2,358,000 

1,614,000 
1,417,000 
825.000 
788,000 
623,000 
620,000 

582,000 
541,000 

454,000 
414,000 
345,000 
222,000 
255,000 
166.000 

9.2 

13.1 

8.3 
11.0 
7.5 
82 
8.2 
8.3 

9.8 
12.9 

23.7 
10.5 
13.7 
15.9 
15.3 
20.1 

3.4 
3.2 
6.2 
2.7 
3.6 
5.9 
2.8 
2.6 
5.5 
4.6 
8.4 
4.3 
1.4 
3.5 
1.3 
1.6 
1.5 
3.2 
22.8* 
2.0 
1.0 

7,280,000 

2,940,000 

2.320,000 

2,115,000 

1,150,000 

1,207,000 

880,000 

839,000 

606,000 

617,000 

608,000 

558,000 

565,000 

537,000 

547,000 

487,000 

340,000 

308,000 

351,000 

243,000 

292,000 

London 

Paris 

Berlin 

Vienna 

Glasgow 

Hamb'g-.Mtona 

Budapest 

Brussels 

Munich 

Leipzig 

Copenhagen 

Dresden 

Marseilles 

Breslau 

Lyons 

Antwerp 

Liege 

Chemnitz 

Stockholm 

Trieste 

Ghent 

Government 

Government 

Government 

Government 

Government 

Government 

Government 

Government 

Government 

Government 

Private 

Government 

Government 

Government 

Government 

Government 

Government 

Government 

Gov.  &  Priv. 

Government 

Government 

St.   Louis,   Mo 

Pittsburgh,   Pa 

Baltimore,  Md 

Cleveland,    Ohio 

Cincinnati,    Ohio 

San  Francisco,  Cal 

.Milwaukee,  Wis 

Washington,  D.  C 

Portland,  Ore 

Omaha,   Neb 

I 


*0f  which   70   per  cent,   is  that  of   the   Stockholm  Telephone  Company  which  competes  with  the  government 
and  does  not  have  connection  with  the  government  long  distance  lines. 

It  should  be  noted  in  connection  with  the  above  statistics,  that  the  development  in  Stockholm 
and  Copenhagen  compares  very  favorably  with  that  in  the  various  American  cities.  This  fact  refutes 
the  argument  that  the  difference  in  American  and  European  development  is  due  to  differences  in  the 
commercial  and  social  character  of  the  people  in  the  United  States  and  in  tiie  foreign  countries;  and 
indicates  that  under  progressive  commercial  management  the  telephone  could  be  as  widely  used  in 
Europe  as  in  the  United  States. 

It  should  be  further  noted  that  in  Europe,  under  government  management,  the  larger  cities  are 
comparatively  well  developed,  whereas  the  country  districts  and  smaller  cities  have  very  little  develop- 
ment. In  the  United  States  the  large  cities  have  not  been  developed  at  the  expense  of  a  general  tele- 
phone development. 

A  somewhat  more  significant  statement  of  urban  telephone  development  is  contained  in  the 
following  table  in  which  cities  of  more  than  300,000  population  in  Northwestern  Europe  and  the 
I 'lilted  States  are   listed  in   the  order  of  telephone  development: 


I 


54 


TELEPHONE  DEVELOPMENT  IN  CITIES  OF  MORE   THAN   300,000   POPULATION    IN   THE   UNITED 
STATES  AND  NORTHWESTERN  EUROPE.  ARRANGED   IN   ORDER   OE   DEVELOPMENT. 

JANUARY  1.  1913."" 


City 


Tolcphones 


San   Francisco    . 

Stockholm   

Stockholm    

Los  Angeles   

Washington     . . . , 

Chicago    

Detroit    

Boston 

Minneapolis    . . . . 

Milwaukee  , 

Cincinnati  

New  York  

Copenhagen   

Philadelphia    .... 

Cleveland   

Pittsburgh    

Baltimore   

Kansas  City  . ; . . . 
Charlottenburg   . . 

St.  Louis 

Buflfalo    

Stockholm 

Stuttgart    

Newark    (N.  J.). 

Berlin    

Frankfort   

Hamburg- Altona 

Munich    

New  Orleans  .  . . . 

Hanover  

Leipzig    

Cologne 

Dresden    

Dusseldorf  

Nuremburg    

Hull   

Jersey  City   

Glasgow   

Breslau   

Edinburgh    

London   

Essen  

Liverpool    

Chemnitz    

Paris    

Rotterdam    

Budapest 

Vienna 

Bradford 

Amsterdam    

I'russels    

Portsmouth    

Manchester    

Bristol  

Leeds  

Dublin  

Newcastle 

Nottingham   

Belfast    

Birmingham    . . .. 

Sheffield    

Antwerp    

Liege  

Marseilles 

Lyons    

Blackburn  

Bolton   


per  100 

Operated  by 

Population* 

;'3.7 

Private 

22.8 

Gov.  &  Privatet 

159 

Private  only 

14.0 

Private  (Bell  only) 

13.7 

Private 

13.1 

Private  (Bell  only) 

12.9 

Private 

11.0 

Private 

10.6 

Private  (Bell  only) 

10.S 

Private 

9.8 

Private 

92 

Private 

8.4 

Private 

83 

Private   (Bell  only) 

8.3 

Private   (Bell  only) 

8.2 

Private 

82 

Private 

8.1 

Private   (Bell  only) 

8.1 

Government 

75 

Private  (Bell  onlv) 

7.1 

Private  (Bell  only) 

6.9 

Government   (only) 

6.5 

Government 

62 

Private 

62 

Government 

6.1 

Government 

5.9 

Government 

5.5 

Government 

5.1 

Private 

4.7 

Government 

4.6 

Government 

4.3 

Government 

4.3 

Government 

42 

Government 

4.0 

Government 

4.0 

Gov.  &  Municipal  (1913) 

3.8 

Private 

3.6 

Government 

3.5 

Government 

3.4 

Government 

34 

Government 

3.4 

Government 

3.2 

Government 

3.2 

Government 

3.2 

Government 

2.9 

Municipal 

2.8 

Government 

2.7 

Government 

2.7 

Government 

2.7 

Municipal 

2.6 

Government 

2.5 

Gov.  &  Municipal 

2.5 

Government 

2.1 

Government 

2.1 

Government 

2.0 

Government 

20 

Government 

2.0 

Government 

1.7 

Government 

1.7 

Government 

1.7 

Government 

1.6 

Government 

1.5 

Government 

1.4 

Government 

13 

Government 

1.2 

Government 

12 

Government 

States 
States 
States 
States 
States 


Countrv 


United  States 

Sweden 

Sweden 

United  States 

United  States 

United  States 

United  States 

United 

United 

United 

United 

United 

Denmark 

United  States 

United  States 

United  States 

United  States 

United  States 

Germany 

United  States 

United  States 

Sweden 

Germany 

United  States 

Germany 

Germany 

Germany 

Germany 

United  States 

Germany 

Germany 

Germany 

Germany 

Germany 

Germany 

Great  Britain 

United  States 

Great  Britain 

Germany 

Great  Britain 

Great  Britain 

Germany 

(jreat  Britain 

Germany 

France 

Netherlands 

Hungary 

Austria 

Great  Britain 

Netherlands 

Belgium 

Great  Britain 
Britain 
Britain 
Britain 
Britain 
Britain 
Britain 
Britain 
Britain 

Great  Britain 

Belgium 

Belgium 

France 

France 

Great  BriUin 

Great  BriUin 


Great 
Great 
Great 
Great 
Great 
Great 
Great 
Great 


•This  covers   Bell   stations   only,   for  the  American  cities. 

fAbout  70  per  cent,  of  development  is  private.    This  development  of  the  Co.npany  and  of 
the  State  are  shown  separately  in  the  table  in  the  proper  order. 


55 


Summary  as  to  Telephones. 

Mr.  Lewis'  propositions  concerning  telephones  were :  that  the  institutional  efficiency  of  private 
telephone  systems  was  relatively  low;  that  their  rates  were  relatively  high;  and  that  the  develop- 
ment of  their  service  was  relatively  low.  These  propositions  he  attempted  to  prove  by  various 
assumptions  which  were  erroneous.  In  rebutting  his  assumptions  and  conclusions  it  has  been  shown 
that : 

1.  The  institutional  efficiency  of  the  American  telephone  service  is  not  exceedingly  low  but 
exceedingly  high. 

2.  The  rates  for  American  exchange  service  are  clearly  lower  than  those  of  any  government 
system. 

3  The  rates  for  telephone  service  are  lower  in  large  American  cities  than  in  many  large 
foreign  cities  operated  by  government  administrations. 

4.  The  rates  in  the  smaller  American  exchanges  are  strikingly  lower  than  in  the  smaller  ex- 
changes of  the  government  systems.  This  is  indicated  most  clearly,  for  general  purposes,  by  the 
disparity  between  the  "rural"  development  in  the  foreign  countries  and  the  development  in  the  for- 
eign cities,  resulting  from  the  disproportionately  high  rates  in  rural  communities  of  foreign  coun- 
tries. 

5.  The  history  of  rates  in  American  cities  which  were  formerly  competitive  does  not  war- 
rant the  statement  that,  following  the  withdrawal  of  competition.  Bell  rates  have  been  increased.  As 
a  matter  of  fact,  it  is  clearly  the  case  that,  in  general,  the  reverse  has  been  true. 

6.  The  American  toll  rates  are  clearly  lower  than  those  of  the  government  systems  for  all 
distances  within  which  the  great  volume  of  interurban  toll  traffic  passes ;  and  are,  in  fact,  so  much 
lower,  tliat  the  American  toll  rates  as  a  whole  are  distinctly  far  below  the  foreign  toll  rates. 

7.  The  development  of  toll  traffic  in  the  United  States  is  not  relatively  low,  but  relatively 
high,  and  is,  in  fact,  approached  only  in  those  countries  where  private  operation  of  telephone 
systems  has  materially  fostered  the  development  of  the  utility. 

8.  The  development  of  local  service,  as  indicated  by  local  traffic  per  capita,  is  at  least 
double  that  in  any  foreign  country,  although  it  is  noteworthy  that,  in  those  countries  which  rank 
nearest  to  the  United  States  in  the  development  of  traffic,  private  operation  is  a  factor  of  very 
great  importance. 

9.  The  development  of  telephones  per  one  hundred  population  in  the  United  States  is  more 
than  double  that  in  any  foreign  country. 

10.  The  development  of  American  telephone  service,  as  indicated  by  the  development  in  the 
largest  cities,  is  greater,  on  the  whole,  than  m  foreign  countries.  It  is,  however,  equalled  in 
those  large  foreign  cities  where  private  companies  operate,  either  exclusively,  or  in  competition 
witli  the  government. 

11.  The  dcvclupmenl  of  telephone  service,  as  indicated  by  the  number  of  telephones  per 
one  hundred  population  in  the  smaller  exchanges  and  rural  communities,  is  very  much  greater  in 
the  United  States,  not  only  absolutely,  but  relatively  to  the  development  in  the  large  cities  in  the 
respective  countries. 

CONCLUSION. 

It  has  been  shown,  in  the  preceding  pages,  that  tlie  information  given  by  Mr.  Lewis  is  not  only 
seriously  incomplete,  but  that,  when  not  in  error,  it  supports  conclusions  entirely  contrary  to  those 
which  he  has  drawn.  While  it  has  been  a  part  of  the  purpose  of  this  paper  to  meet  some  of  the 
specific  criticisms  made  by  Mr.  Lewis,  the  larger  purpose  of  the  paper  has  been  to  present  significant 
information  concerning  tiie  effect  of  government  ownership  on  tlie  efficiency,  rates,  and  development 
of  the  telegraph  and  telephone  services.  In  all  fairness,  it  should  be  stated  that  the  information 
given  has  been  derived  from  many  official  sources  which  have  probably  not  been  available  to  Mr. 
Lewis,  who  has  been  compelled  to  rely  largely  upon  the  "Journal  Telegraphique" — a  source  which, 
although  official  in  a  sense,  is  necessarily  inadequate  for  a  careful  study  of  this  subject. 


56 

In  further  justice  to  Mr.  Lewis,  something  ought  also  to  be  said  concerning  the  very  serious 
difficulties  under  which  the  layman  labors  in  the  coUcclion  and  interpretation  of  the  highly  technical 
statistics  of  the  telegraph  and  telephone  utilities.  This  difficulty,  of  co'irse,  is  not  peculiar  to  these 
utilities — it  applies  equally  to  any  complex  business  or  subject,  whether  it  be  transportation,  banking, 
or  insurance. 

In  conclusion,  perhaps  no  more  appropriate  expression  can  be  given  to  tiie  spirit  in  which 
this  paper  has  been  prepared,  than  that  furnished  b}  a  statement  made  by  Theodore  N.  Vail,  Presi- 
dent of  the  American  Telephone  and  Telegraph  Company,  in  response  to  an  inquiry,  December  19th 
1913: 

"Our  telephone  system  has  been  the  study  of  investigators  from  many  countries.  It  has  been 
considered  the  world's  model,  not  because  it  is  the  largest,  but  because  it  gives  llie  best  service  and 
is  more  useful  to  the  public  than  any  other  system. 

"Such  success  as  we  have  achieved  has  come  from  our  study  of  facts  and  our  willingness 
to  be  guided  by  them.  We  have  not  endeavored  to  sell  our  telephone  system  to  the  government  for 
the  reason  that  the  facts  as  we  have  gleaned  them  during  the  last  thirty  years  from  all  parts  of 
the  world,  have  not   justified  such  a  course. 

"Our  people  are  personally  familiar  with  every  telephone  system  that  today  exists.  The  tele- 
phone experience  of  Japan  or  France,  is  as  closely  studied  as  the  experience  of  one  of  our  Amer- 
ican cities. 

"We  have  freely  given  our  aid  to  make  the  government  systems  in  foreign  lands  as  good  as 
possible,  believing  that  every  advance  in  the  art  helped  us  to  advance.  We  have  never  found  any 
foreign  subscribers  as  well  served  as  our  subscribers,  nor  any  foreign  public  receiving  greater  ad- 
vantages from  the  telephone  than  the  American  public. 

"We  recognize  our  responsibility  to  the  telephone-using  public,  which  is  practically  the  whole 
public,  and  for  that  reason  favor  an  intelligent,  painstaking,  thorough,  scientific  study  of  the  pro- 
posals for  public  ownership.  We  cannot  be  content  if  facts  which  we  know  to  exist  are  care- 
lessly ignored.  But  if  all  the  facts  are  discovered,  understood,  and  exploited,  we  are  bound  to  be 
content  with  a  decision  based  on  these  facts." 


57 


APPENDIX     A. 

INFORMATION  CONCERNING  THE  ADEQUACY  OF  COMPENSATION 
FOR  RAILWAY    MAIL  TRANSPORTATION    IN  THE  UNITED  STATES. 

1.    THE    OFFICIAL    DOUBT   AS    TO     THE    ADEQUACY    OF    COMPENSATION     TO 

RAILROADS. 
Postmaster  General  Burleson: 

"Compensation  To  Railroads  for  Carrying  The  Mails. 

"Compensation  to  railroads  for  carrying  the  mails  is  under  the  present  laws  adjusted  upon 
the  basis  of  average  daily  weights  of  mails  carried.  In  addition  to  this  certain  rates  of  pay  arc 
allowed  for  full  railway  post-office  cars  40  feet  and  more  in  length,  fitted  up  and  furnished  for 
the  distribution  of  mails  en  route.  Reference  has  been  made  in  previous  annual  reports  to  the 
inquiry  conducted  by  the  department  under  authority  of  law  into  the  operating  receipts  and  ex- 
penditures of  railroad  companies  carrying  the  mails  and  to  the  submission  to  Congress  of  the 
results  of  such  inquiry,  together  with  recommendation  for  a  change  in  the  method  of  adjusting 
pay. 

"The  whole  subject  has  since  been  taken  up  by  a  joint  committee  of  Congress  authorized  to 
make  inquiry  into  the  subject  of  postage  on  second-class  mail  matter  and  compensation  for  the 
transportation  of  mails.  The  department's  officers  in  charge  of  transportation  have,  upon  the  re- 
quest of  the  comnu'ttee,  appeared  before  it  during  the  numerous  hearings  which  have  been  held 
and  have  submitted  such  additional  information  as  they  possessed  upon  the  general  subject.  The 
representatives  of  the  railroad  companies  have  also  appeared  before  the  committee.  In  the  mean- 
time the  new  conditions  in  the  postal  service,  mainly  those  arising  from  the  inauguration  and  the 
development  of  the  parcel-post  system,  are  being  given  careful  consideration  in  connection  with 
the  general  question,  and  before  the  commission  is  ready  to  report  the  final  views  of  the  depart- 
ment will   be  submitted  to   it. 

"Tlie  determination  of  what  shall  be  the  basis  for  ascertaining  a  fair  rate  of  compensation 
for  carrying  the  mails  is  not  free  from  difficulties.  From  a  careful  consideration  of  the  subject  it 
becomes  evident  that  the  carriage  of  the  mails  by  the  railroad  companies  for  the  Government  can 
not  be  considered  as  of  the  same  character  of  service  as  that  performed  by  them  as  common  car- 
riers for  the  general  public.  Tlie  railroads  have  received  certain  benefits  from  the  States  from 
which  they  derive  their  corporate  existence,  anrj  their  interstate  commerce  is  subject  to  the  reg- 
ulation of  the  Federal  Government.  Some  of  them  have  received  substantial  aid  from  the  Federal 
Government  by  grants  of  lands,  and  otherwise.  They  are  declared  by  law  to  be  post  roads.  As 
mail  carriers  they  are  agencies  of  the  Post  Office  Department  and  are  performing  a  governmental 
function.  The  po.stal  business  is  not  carried  on  by  the  Government  for  profit  but  in  furtherance 
of  the  constitutional  power  to  establish  post  offices  and  post  roads  under  which  it  furnishes  postal 
facilities  to  all  of  its  citizens.  The  railroads,  therefore,  may  not  deal  with  the  Government  as 
they  would  with  a  shipper  who  uses  their  facilities  as  a  common  carrier  for  profit  or  for  some 
special  advantage.  Furthermore,  the  general  business  which  sustains  a  railroad  is  to  a  large  ex- 
tent dependent  upon  the  mails  and  their  certain  and  expeditious  transportation,  and  the  carriage 
of  the  mails  by  the  railroad  contributes  to  its  prosperity  to  an  extent  and  in  a  manner  which  does 
not  obtain  for  any  other  class  of  its  business.  From  these  and  other  considerations,  it  follows  that 
rates  for  carrying  the  mails  on  railroads  should  be  less  than  those  which  might  be  fixed  for  com- 
mercial  business." 


"In  order  to  provide  additional  compensation  to  mail  contractors  for  carrying  parcel-post 
matter.  Congress  authorized  the  Postmaster  General  to  make  certain  readjustments  of  pay  to  rail- 
road companies  and  to  screen  wagon  and  star-route  contractors. 


58 

"On  account  of  the  increased  weight  of  mail  rcsiihing  from  the  enactment  of  the  parcel- 
post  law,  the  Postmaster  General  was  autiiorizcd  by  the  act  of  March  4,  iyi.\  to  aikl  to  the  com- 
pensation for  transportation  on  railroad  routes  on  anti  after  July  1.  l^KS,  f,.r  the  remainder  of 
the  contract  terms,  not  exceeding  5  per  cent  thereof  per  annum,  excepting  upon  routes  weighed 
since  January  1,  1913,  and  to  be  adjusted  from  July  1,  1913.  Careful  estimates  have  been  made 
of  the  increase  in  the  weight  of  mails  carried  on  all  railroad  routes  coming  within  the  scope  of 
the  law.  The  routes  atTected  include  those  in  the  second,  third,  and  fourth  contract  sections  and 
those  located  m  the  New  England  States  in  the  first  contract  section.  Additional  compensation  has 
been  allowed,  based  upon  the  statutory  rate  earned  by  the  estimated  increased  weight  of  mails, 
not  exceeding,  however,  5  per  cent,  the  limit  fixed  by  law.  The  increase  in  annual  rate  of  com- 
pensation by  the  allowances  made  under  this  authority  aggregates  $1,()S2.360.19." 


"Criticism  by  some  has  been  directed  against  the  department  for  the  inauguration  of  the 
parcel-post  system  with  provisions  of  only  5  per  cent  increase  in  compensation  to  railroads  where 
weighings  have  not  occurred  since  January    1,   1913.  and  for     *     *     * 

"With  respect  to  the  first  it  should  be  remembered  that  Congress  provided  for  the  inauguration 
of  the  system,  and,  with  such  facts  before  it  as  were  available,  authorized  the  addition  of  not  exceed- 
ing 5  per  cent,  to  the  compensation  from  July  1,  1913,  as  above  stated.  It  must  be  presumed  that 
Congress  intended  this  allowance  to  be  full  compensation  for  the  additional  weights  carried  until  it 
should  make  other  provision.     *     *     *"'- 


II.    TABLE  INDICATING,  IN    GENERAL,    THE    BASIS    OF   COMPENSATION    TO 
RAILROADS.     SCHEDULE  OF    COMPENSATION    TO    RAILROADS." 


Average  weight 

of  mails  per  clay 

carried  over  whole 

length  of  route 

Fay    Per    Mile    Pi-r   Annum. 

Indeterminate 

Weifiht  Warranting 

.Allowance  of 

$1  per  mile 

3/3/1873 

7/12/1876 

6/17/1878 

3/2/1907 

Land  Grant 
Railroads 

200  lbs 

$50.00 
75.66 
10066 
125.66 
150.66 
175.00 
200.66 

25.00 

25.00 

25  00 
30.00 
40.00 
50.00 

$45.00 
67.56 
90.66 
ll'i.SO 
135.66 
157.50 
180.66 

22.50 
22  50 

$42  75 
64.12 
85.56 

106'.87 

iisis 

149.62 

171.66 

21.38 
21.38 

$42.75 

64.12 

85.S6     • 
106".87 
118.25 
149.62 
171.66 

20.30 

19.24 

25.00 
27.50 
32.50 
40.00 

$34.20 

51.36 

68'.46 

8S.56 

102.60 

119.70 

136.80 

16.24 
17.10 

12 
20 
20 
20 
60 
60 
80 

200-500  lbs 

500  lbs 

500-1000  lbs 

1000  lbs 

1000-1500  lbs 

1500  lbs 

1500-2000  lbs 

2000  lbs 

2000-3500  lbs 

3500  lbs 

3500-5000  lbs 

5000  lbs 

SOOO-48000  lbs 

For  every  additional  2000 
lbs.  over  5000  and  un- 
der 48000    

For  every  2000  lbs.  over 
48000  

Railway  P.  O.  Cars 

40  ft.  long 

45  ft.  long 

SO  ft.  long 

55  ft.  long 

III.  PAYMENTS  FOR  TRANSPORTATION  OF  MAILS  AND  FOR  TRANSPORTATION 
OF  EXPRESS  MATTER  OF  SIMILAR  CHARACTER. 

Presented  by  Mr.  Julier  before  the  Walcott  Commission   to    Refute    the    Statement    that    More 
was  Paid  for  Mail  Transportation  than  for  Express  Transportation: 


59 


TABLE  SHOWING  AND  COMPARING  RATE  RECEIVED    BY    RAILWAYS    PER    HUNDRED    WEIGHT 
FOR  TRANSPORTATION  OF  UNITED  STATES   MAIL  AND   RATES   RECEIVED   FOR 
THE  CARRIAGE  OF  EXPRESS  BUSINESS  BETWEEN  POINTS  NAMED 

BELOW." 


NEW  YORK  to: 

Buffalo  

Chicago    

Omaha  

Indianapolis   ... 

Columbus    

East  St.  Louis   . 

Portland,  Me.  . . 
CHICAGO  to: 

Milwaukee    .... 

Minneapolis    ... 

New  Orleans  . . . 

Detroit   

Cincinnati    

CINCINNATI  to: 

St.  Louis  

Chicago    

Cleveland 


Distance 


440 
980 

1,480 
906 
761 

1,171 
347 

85 
421 
922 

284 
306 

374 
306 
263 


Mail 

Rate  per 

100  lbs.  (a) 


$1.58 
3.57 
5.38 
ill 
2.49 
4.38 
1.33 

.34 
1.83 
5.27 
1.34 
1.20 

1.61 
1.20 
1.26 


Express 


Amount  Act 

ually 

Amount  Actually 

Received  by 

Received  by 

Railroad  Cos. 

Railroad  Cos. 

per  100  lbs. 

(b) 

per  100  lbs.  (c) 

$1.16 

$4.13 

2.59 

5.47 

4.89 

6.62 

2.57 

5.04 

2.06 

5.32 

3.50 

570 

1.22 

4.83 

.40 

3.30 

2.00 

4.52 

3.16 

643 

.75 

3.48 

1.07 

3.98 

1.31 

3.72 

1.07 

3.58 

.92 

3.47 

(a)  Allowed  Railroad  Companies  under  last  weighing,  including  cost  of  railroad  post  office 
cars. 

(b)  On  all  classes  of  business  carried   for  express  companies,  including  heavy  merchandise, 
fish,  live  stock,  machines,  etc. 

(c)  On  shipments  weighing  7  lbs.  and  under  carried    for  express  companies. 

IV.    STATEMENT  OF  THE  CHICAGO,  MILWAUKEE  AND  ST.  PAUL  RAILROAD 

COMPANY,  1906,  SHOWING  THAT  PAYMENTS  FOR  TRANSPORTING   EXPRESS 

MATTER    HAVE  INCREASED  MORE  RAPIDLY  FROM    1894-  TO   1905   THAN    RECEIPTS 

FOR  TRANSPORTING  MAIL  MATTER. 

TABLE  COMPILED  FROM  ANNUAL  REPORTS  OF  INTERSTATE  COMMERCE  COMMISSION  SHOWING 
COMPARISON  OF  TOTAL  EARNINGS  OF  ALL  ROADS  IN  U.  S.  FROM  MAIL  AND  EXPRESS. 


I 


Year 

Mail  Earnings 

Express  Earnings 

Per  cent. 
Express 
To  Mail 

1894 

$30,059,657 
30,969,746 
32,379,819 
33,754,466 
34,608,352 
35,999.011 
37,752,474 
38,453,602 
39,835.844 
41,709,396 
44.499,732 
45,426.125 

$23,035,300 
24,284,508 
24.880,383 
24,901,066 
25,908.075 
26,756,054 
28,416,150 
31,121,613 
34,253.459 
38.331.964 
41,875.636 
45.149,155 

76 
78 
76 
73 
74 
74 
75 
80 
85 
91 
94 
99 

1895 

1896 

1897 

1898      

1899 

1900 

1901 

1902 

1903 

1904 

1905 

TABLE  SHOWING  PRINCIPAL  EXPENSE  ITEMS  OF  POST  OFFICE  DEPARTMENT  FROM   1898-1905. 


Transportation  of  Mails  on  R.  R.  and  R.  R.  P.  O.  car  pay 

Compensation   to   Postmasters 

City  Free  Delivery 

Compensation  of  Clerks  in  P.  O 

Compensation  of  R.  R.  Mail  Clerks 

Transportation  of  Mails  on  Star  Routes 

Transportation  of  Foreign  Mail 

Rent.  Light,   I'liel.  etc 

Rural  Free  Delivery* 

Total  Expenses  

Total  Receipts  

♦Commenced  1898. 


1898 


1905 


Increase 


$^4,203,253 

17.453,433 

13.386.593 

10,589,069 

8,066,602 

5,286.614 

1,620.282 

1,581.649 

50,0a) 

$98,033,523 
89.012.618 


$44,893,960 

22,743.342 

20,919.078 

21.215,303 

13,120,155 

7,326,596 

2,693,812 

2,568,572 

20,819,944 

$167,399,169 
152,826,585 


$10,690,706 

5,289,908 

7.532,484 

10.626,234 

5.053,553 

2,039,981 

1,073,529 

986,922 

20,769,944 

$69,375,656 
63,813,966 


Per  cent. 
Increase 


31 
30 
56 
100 
62 
38 
66 
62 


71 

n 


60 

V.     CONGRESSMAN   MOON,   IN   A    SPEECH    IN    THE  HOUSE   OF  REPRESENTATIVES, 

JANUARY  17,  1914: 

"There  is  another  question  that  is  intensely' vital  to  the  welfare  of  this  people,  a  question 
the  consideration  of  which  by  the  Committee  on  the  Post  Office  and  Post  Roads  awaits  only  the 
incoming  report.  That  is  the  matter  of  the  computation  of  pay,  the  method  of  pay  to  railroads 
and  transportation  companies  of  the  United  Stales  for  the  handling  of  the  mails.  The  railroads 
insist  today  tiiat  they  are  not  sufficiently  compensated  for  this  service.  The  department  tells  us 
that  the  compensation  of  the  railroads  is  too  great.  Of  course,  no  honest  man  wants  the  railroad 
companies  to  carry  the  mails  of  the  United  States  for  less  money  tlian  it  costs  them  to  carry 
those  mails.  No  man  would  be  unwilling  that  they  should  have  a  fair  remuneration.  Yet  the 
metliod  by  which  this  compensation  is  determined  is  so  unsatisfactory,  so  incomplete,  so  unbusi- 
ness-like  that  you  cannot  come  within  $15,000,000  of  determining  what  the  legitimate  pay  should 
be  for  the  inland  transportation  of  the  mails. 

"You  can  know,  of  course,  what  you  do  pay.  You  know  what  they  carry.  You  know 
what  you  receive  by  way  of  compensation  in  postage,  but  under  the  present  methods  you  cannot 
estimate  sufficiently  close  to  determine  what  would  be  the  legitimate  compensation,  as  I  say,  within 
$15,000,000  or  $20,000,000. 

"By  the  way,  I  had  better  remark  here  that  the  United  States  is  divided  into  four  divisions 
for  the  purpose  of  weighing  the  mails  and  ascertaining  the  compensation  due  to  inland  carriers 
for  the  transportation  of  the  mails.  There  is  a  quadrennial  weighing.  For  instance,  the  mails 
are  weighed  in  New  England  this  year.  That  weight  will  form  the  basis  of  compensation  by  the 
ton-mile  for  four  years.  The  mails  in  the  western,  northern,  and  southern  sections  are  weighed, 
each  once  in  four  years,  and  the  system  of  compensation  there  is  the  same.  It  is  only  every  four 
years  that  you  get  at  the  weights,  and  it  has  been  charged — I  know  not  how  truly — that  during  the 
weighing  period  the  mails  in  one  section  are  diverted  and  carried  around  through  that  section  in  order 
that  the  weigl.t  of  the  mails  may  be  heavy  in  that  section,  in  order  that  the  same  mail  may  be 
weighed  many  times  and  form  the  basis  for  computation  of  pay.  Whether  this  is  true  or  not,  I 
cannot  say.  I  would  imagine,  however,  that  no  great  amount  of  fraud  of  this  sort  would  be 
practiced.  Yet,  let  it  be  ever  so  honest,  the  conditions  of  this  country,  its  transportation,  its  bus- 
iness, its  industries,  vary  so  much  in  a  period  of  four  years  that  if  you  base  the  pay  upon  the  first 
of  the  four  years  the  compensation  for  the  next  three  years  must  be  altogether  a  matter  of  specu- 
lation, because  the  increase  may  be  double  what  it  was,  or  it  may  be  less  than  one-half  of  what 
it  was,  or  it  may  be  normal.  The  commission  which  is  soon  to  report  will  bring  before  the  com- 
mittee a  plan  by  which  it  is  hoped  to  obtain  more  satisfactory  results."'* 


61 


APPENDIX     B. 

THE     ELIMINATION     OF    CERTAIN     TELEGRAPH     OPERATIONS 

UNDER    POSTALIZATION. 

Under  the  heading  "Efficiency  of  Telegraphic  Administration,"  Mr.  Lewis  states:  "The 
next  element,  'efficiency  in  details  of  management,'  will  require  more  elaborate  discussion."  The 
discussion  consists  solely  of  two  lists  of  operations  involved  in  transmitting  and  accounting  for 
commercial  telegrams  at  the  present  time,  which  are  followed  by  the  simple  statement  that,  "with 
the  introduction  of  the  stamp  and  other  simplified  postal  methods,"  sixteen  of  the  operations  in 
the  first  list  and  that  all  of  those  in  the  second  list   (forty-two  in  number)  could  be  eliminated. 

A  classification  of  the  items  named  by  Mr.  Lewis,  although  his  list  is  somewhat  incomplete, 
will  indicate  the  true  relation  of  each  detail  of  work  to  the  general  functions  involved  in  tele- 
graph operation.     This  classification  is  as  follows: 

1.  Those  operations  directly  involved  in  the  receipt  and  delivery  of  telegrams  at  counters 
and  by  messengers.  Most  of  these  operations  are  not  peculiar  to  the  telegraph  business,  and 
may  be  perceived  by  the  public  and  easily  understood  without  special  knowledge.  They  may 
be  entitled  "Commercial  Operations." 

2.  Those  operations  directly  involved  in  the  electrical  transmission  and  receipt  of  messages. 
These  operations  are  not  generally  seen  by  the  public,  are  not  similar  to  those  in  other  kinds  of 
business,  and  are  technical  in  character.     They  may  be  designated  as  "Operating  Work." 

3.  Those  items  of  work  which  are  associated  with  general  accounting  and  auditing  of 
telegraph  business,  and  known  as  "Accounting  Operations." 

Before  discussing  Mr.  Lewis'  suggestions  under  these  heads,  It  may  be  stated  that  the 
obviously  important  question  at  issue  is  not  whether  the  elimination  of  any  of  these  practices 
would  reduce  expenses, — that  is  admitted, — but  whether  the  practices  themselves  could  or  could 
not  be  abolished  under  government  ownership,  without  detriment  to  the  service.  Changes  involv- 
ing all  these  operations  which  Mr.  Lewis  thinks  could  be  eliminated,  have  been  considered  by  the 
telegraph  companies  and  have  been  rejected.  Moreover,  stamps  have  been  used  and  the  practice 
has  been  abandoned  by  telegraph  companies.  Mr.  Lewis  has  raised  no  new  question.  It  is  pro- 
posed merely  to  show  that  practices  which  are  not  satisfactory  under  private  operation  would  be 
equally   unsatisfactory   under    Government    ownership. 

COMMERCIAL    OPERATIONS. 

The  following  items  (as  numbered  in  Mr.  Lewis'  list)  may  be  described  as  "commercial 
operations."     Those  lettered  Mr.   Lewis  thinks  can  be  eliminated  under  postalization. 

The  Telegraph  Company  (i.  e.  Receiving  Clerk). 

1.  Figures  charges  on  telegrams. 

2.  Reads  each  message   for  purpose  of  properly  deciphering  it. 

3.  Marks  on  each  message  "time  filed." 

4a.  Enters  each  telegram  on  sheet  "receiving  clerk's  record." 
5.     Turns  in  cash  to  local  cashier. 

^-    f 

7b. J      (See  "Operating  Work,"  page  63.) 

8c.  [ 

Delivery  Clerk. 

lie.  Makes  wet  copy  of  telegram. 

12f.   Puts  delivery  number  on  telegram. 

13g.  ATakes  out  delivery  sheet  for  messenger. 

14h.  Enters  telegram  on  "delivery  clerk's  record." 


I 


62 

15.     Encloses  telegram  in  envelope  and  addresses  envelope. 
16i.    Examines  delivery  sheet  to  see  telegram  is  properly  receipted  for. 
17'}.  Collects  cash  from  messenger  to  cover  "collect  received"  telegrams. 
ISk.  Turns  in  cash  to  local  cashier. 

Messenger  Boy. 

19.  Delivers  telegram  to  proper  addressee. 

20-1.  Secures  receipt  for  telegram  on  delivery  sheet. 

21.  Collects  cash  on  "collect"  telegrams. 

22m.  Returns  delivery  sheet  and  cash  to  delivery  clerk. 

4-a.  ENTRY  OF  TELEGRAM  ON  THE  RECEIVING  CLERK'S  RECORD.  This  proc- 
ess is  really  an  accounting  process.  The  receiving  clerk's  record  is  merely  a  check  against  the 
receiving  clerk's  cash.  It  is  true  that  if  stamps  could  be  used  exclusively  and  no  cash  payments 
were  permitted,  there  would  be  no  occasion  for  the  receiving  clerk's  record.  The  elimination 
of  this  item  depends  upon  the  consideration  as  to  whether  or  not  stamps  can  be  used  exclusively. 
(See  page  70.) 

U-e.  WET  COPY  OF  TELEGRAM.  This  is  necessary:  first,  in  order  that,  if  a  message 
should  be  lost  in  delivery,  a  copy  of  it  may  be  available  for  duplicating  purposes;  second,  for 
service  purposes,  in  order  that  if  any  question  concerning  the  service  on  a  message  arises,  the 
necessary  data  for  investigating  the  service  at  the  terminal  office  may  be  available;  third,  in 
order  that  a  complete  record  of  the  message  may  be  on  hand  for  reference  as  a  basis  for  the 
necessary  service  messages,  in  case  the  addressee  requires  its  duplication  or  verification  of 
doubtful  words;  fourth,  in  order  that  piompt  and  correct  responses  may  be  made  to  patrons 
making  inquiry  concerning  their  messages;  and  fifth,  that  a  copy  may  be  available  in  case  the 
addressee  should  call  while  the  messenger  is  out  on  his  route  with  the  message  (which  happens 
frequently  in  the  case  of  transient  addressees).  Apparently,  this  operation  is  not  related  to  the 
question  of  stamps ;  and  it  could  not  be  eliminated  without  curtailment  of  service. 

12f,  13g,  14Ii.  DELIVERY  NUMBER  ON  MESSAGE,  DELR'ERY  SHEET,  DE- 
LIVERY CLERK'S  RECORD.  What  Mr.  Lewis  refers  to  as  "delivery  clerk's  record"  is 
actually  known  as  the  Delivery  Register. 

The  delivery  sheet  is  a  small  sheet  which  a  messenger  takes  out  with  him  and  on  which 
he  secures  receipts  for  the  messages  delivered.  The  delivery  number  is  placed  on  the  message 
itself  (it  is  copied  with  the  message  on  the  water  copy),  on  the  delivery  sheet  and  on  the  de- 
livery register.  The  original  message  is,  of  course,  delivered  to  the  addressee  and  passes  out  of 
the  possession  of  the  telegraph  company.  After  delivery,  the  only  means  of  identifying  the 
addressee's  receipt  on  the  delivery  sheet  with  the  message  which  was  delivered  to  him  is  the 
delivery  number  appearing  on  the  sheet  and  the  corresponding  number  appearing  on  the  water 
copy  of  the  message. 

The  delivery  number,  as  stated,  is  also  placed  on  the  delivery  register  (which  is  kept  by 
the  delivery  clerk),  and  on  this  register  is  also  entered  the  number  of  the  messenger  to  whom 
the  message  was  given  and  the  time  when  he  was  sent  out  with  it.  The  purpose  of  this  is  to 
insure  that,  if  the  messenger  should  lose  any  of  the  messages  entrusted  to  him,  or  should  lose  his 
delivery  sheet  after  having  delivered  his  messages,  there  will  be  some  way  of  determining  what 
messages  he  had,  the  water  copies  of  the  messages  being  identifiable  by  reference  to  the  number 
on  the  delivery  register,  as  compared  with  the  delivery  numbers  on  the  water  copies.  In  serv- 
ice investigations  and  supervision,  the  deliver)-  number  also  serves  as  a  speedy  means  of  tracing 
the  service  on  messages  which,  without  this  ready  means  of  identification,  would  be  extremely 
laborious  and  expensive. 

The  use  of  stamps  does  not  appear  to  be  involved  in  these  operations,  so  that  Mr.  Lewis' 
criticism  of  them  indicates  that  the  telegraph  companies  arc  merely  doing  work  which  they  could 
avoid,  and  which  their  own  interests  would  be  likely  to  eliminate,  if  practicable.  These  opera- 
tions appear  to  be  as  necessary  as  similar  operations  in  connection  with  registered  mail ;  and  it  is  sug- 
gested that  it  is  as  important  to  secure  an  accurate  delivery  of  telegrams  as  of  registered  mail. 


63 

16i,  20-1,  22m.  MESSENGER  SECURING  RECEIPT  FOR  TELEGRAM  ON  DE- 
LIVERY SHEET  AND  EXAMINATION  OF  DELIVERY  SHEET  BY  DELRERY  CLERK 
TO  SEE  THAT  TELEGRAM  IS  PROPERLY  RECEIPTED  FOR.  The  suggested  elimina- 
tion of  the  addressee's  receipt,  infers  that  a  service  as  important  as  that  of  the  delivery  of  tele- 
grams may  be  conducted  with  an  utter  lack  of  control  or  responsibility  concerning  its  proper 
performance.  Every  message  is  important  to  the  person  who  sends  it  and  to  the  person  who 
receives  it;  and,  therefore,  it  is  important  to  the  telegraph  company,  or  to  whatever  agency  per- 
forms the  telegraph  service,  to  know  that  each  message  has  been  properly  delivered.  The  rec- 
ord of  its  delivery,  having  been  established  by  the  addressee's  signature,  may  be  required  to 
establish  the  fact  and  the  lime  of  delivery  in  response  to  inquiries  either  from  the  sender,  or 
from  the  addressee,  in  cases  where  a  subordinate  or  agent  of  the  addressee  has  receipted  for  the 
message.  It  is  frequently  of  importance,  also,  that  the  fact  and  time  of  delivery  be  established 
in  connection  with  controversies  arising  between  the  parties  to  the  correspondence.  The  prime 
necessity  of  the  receipt  and  of  the  notation  of  the  time  of  delivery  by  the  addressee  is  that  it 
may  be  determined  whether  the  delivery  service  is  being  properly  performed,  and  if  it  is  not, 
that  proper  remedial  action  may  be  taken.  The  Post  Office  itself  requires  receipts,  not  only  for 
registered  mail  matter,  but  also  for  special  delivery  letters. 

The  examination  of  the  delivery  sheet  by  the  delivery  clerk  is  a  necessary  corollary  to 
the  taking  of  the  receipt.  The  examination  is  made  for  the  purpose  of  verifying  (so  far  as  is 
possible  by  any  means)  the  correct  delivery  of  each  message,  and  also  of  determining  whether 
there  has  been  any  undue  delay  in  the  delivery  of  any  message. 

In  fact,  it  appears  not  only  that  these  operations  are  necessary  to  good  telegraph  service, 
but  that  their  elimination  would  not  be  consonant  with  existing  postal  practice. 

17j,  18k.  COLLECTION  OF  CASH  FROM  THE  MESSENGER  TO  COVER  COL- 
LECT RECEIVED  TELEGRAMS.  If  the  messenger  is  to  collect  the  tolls  on  collect  messages, 
he  must  turn  in  the  cash  to  the  delivery  clerk,  and  the  delivery  clerk  must  account  for  such 
cash  to  the  cashier.  These  functions  can  be  eliminated  only  on  the  assumption  that  a  "collect" 
telegraph  service  will  not  be  given ;  for  obviously  "collect"'  messages  cannot  be  handled  with  a 
strictly  stamp  settlement,  and  the  government  operated  systems  do  not  handle  "collect"  business. 
It  needs  no  extended  discussion  to  demonstrate  the  value  and  importance  of  "collect  message" 
practice.  Probably  over  10  per  cent,  of  the  telegraph  business  of  the  United  States  is  sent  "col- 
lect" today  to  the  great  accommodation  of  the  public.  It  is  hard  to  understand  on  what  theory 
the  Government  would  curtail  this  service,  purely  to  compel  the  adoption  of  exclusive  stamp 
payments. 

To  summarize  the  considerations  with  respect  to  commercial  operations,  the  only  processes  which 
could  be  eliminated  by  the  use  of  stamps  are  17]  and  18k— and  these  could  be  dispensed  with  only 
by  refusing  a  "collect"  telegraph  ser^'ice.  All  other  items  which  Mr.  Lewis  would  eliminate  are 
essential  to  good  telegraph  service  and  are  similar  to  those  of  the  Post  Office  for  similar  kinds 
of  business. 

OPERATING     WORK. 

The  following  is  Mr.  Lewis'  list  of  operating  items,  those  lettered  being  the  operations  to 
be   dispensed   with   under  postalization : 

The  Telegraph  Company  (i.  e..  Sending  Operator). 
6.     Sends  telegram. 

/b.  Puts  time  sent,  numbers,  sending  and  receiving  operators'  signals  on  telegram. 
8c.  Checks  off  numbers  on  number  sheet,  and  initials  sheet. 
Receiving  Operator. 

9.     Receives  and  transcribes  telegram  on  proper  blank. 
lOd.  Checks  off  number  on  number  sheet  and  initials  opposite  the  number. 
Receiving  Operator  (Relay  Point). 

23.     Receives  and  transcribes  telegram  on  proper  blank. 
24n.  Checks  off  number  on  number  sheet  and  initials  sheet. 


64 

Sending  Operator  (Relay  Point). 

25.     Sends  telegram. 
26-0.  Times  telegram,  etc. 
27p.  Checks  off  number  sheet. 

All  the  foregoing  processes  are  necessary  to  the  maintenance  of  efficient  service.  They 
serve  to  disclose  delays  in  transmission,  to  prevent  the  loss  of  messages,  and  to  place  the  in- 
dividual responsibility  for  delays,  lost  messages  and  errors. 

7b.  OPERATORS'  SIGNALS.  Good  service  can  be  maintained  only  by  constant  watch- 
fulness against  bad  service.  When  errors  are  made  in  iransmiiiing  messages,  when  there  are 
delays  in  their  transmission,  or  when  messaj;es  do  not  reach  their  destination  at  all,  the  fault  is 
always  tliat  of  some  one  individual  who  has  handled  the  message  at  one  of  the  stages  in  its 
progress.  To  eliminate  inefficient  service  conditions,  the  first  essential  is  to  identify  the  in- 
dividuals responsible  for  them.  The  operators'  signals  fix  with  certainty  the  identity  of  the 
operators  who  handled  each  message.  The  abolishment  of  their  use  would  remove  a  safeguard 
against  service  deterioration,  as  indispensable  under  govermnent  operation  as  it  is  under  private 
operation,  if  there  is  to  be  any  serious  intention  of  giving  the  public  the  kind  of  service  to  which 
it  is  entitled. 

7b,  26-0.  TIMING  TELEGIL\MS.  Time  is  of  the  essence  of  telegraph  service.  The 
most  satisfactory  telegraph  service  is  that  which  is  most  quickly  performed.  In  general,  tiie  pub- 
lic is  concerned  only  in  the  lapse  of  time  between  the  filing  of  the  message  and  its  delivery  to 
the  addressee ;  but  in  order  that  this  interval  may  be  as  short  as  possible,  it  is  necessary  that  the 
time  consumed  in  each  of  the  steps  which  go  to  make  up  the  total  service  on  the  message  be  re- 
duced to  a  minimum.  To  do  this,  it  is  essential  that  there  be  some  means  of  controlling  the  time 
consumed  in  those  different  functions,  that  there  be  some  way  of  telling  whether  such  time  con- 
sumed is  excessive,  and  of  correcting  any  inefficiency  in  that  respect  which  may  develop.  For 
this  reason,  all  messages  are  timed  when  they  are  filed,  when  they  are  sent  by  the  operator,  when 
they  are  received,  and  when  they  are  delivered,  and,  if  relayed,  they  are  timed  when  received  at, 
and  when  sent  from  tlie  relay  office.  The  result  is,  that  if  any  message  has  been  unduly  de- 
layed, it  can  readily  be  ascertained  when  and  where  the  delay  occurred;  also  that  there  is,  in 
each  office,  on  the  messages  themselves,  a  complete  record,  which  otherwise  would  not  have  been 
available,  of  the  promptness  with  which  the  business  is  handled  in  that  office.  Such  a  record  is 
of  prime  importance  for  the  purposes  of  the  inspection  which  it  is  necessary  to  make,  to  de- 
termine whether  the  service  is  being  kept  up  to  the  standard. 

The  timing  of  messages  also  enables  the  responsible  chiefs  in  operating  rooms  to  arrange 
the  routing  and  transmission  of  accumulated  business  in  case  of  wire  interruptions,  and  under 
normal  conditions  affords  them  a  ready  means  of  supervising  and  controlling  the  transmission 
of  the  telegrams  passing  through  the  office.  Without  timing,  this  control  would  be  lacking,  there 
would  be  no  effective  gauge  of  the  speed  of  the  service,  there  would  be  every  opportunity  for 
the  service  to  become  slack  and  to  deteriorate  without  adequate  means  of  locating  the  difficulty, 
and  of  correcting  it. 

lOd,  24n,  27p.  THE  NUMBER  SHEET  AND  NUMBERING  OF  TELEGRAMS.  The 
primary  object  of  the  numbering  of  telegrams  by  operators  in  the  order  of  their  transmission 
and  the  checking-off  of  corresponding  numbers  on  the  so-called  number  sheets,  is  to  prevent  the 
loss  of  messages. 

In  actual  operation  the  first  sending  operator,  when  taking  his  place  at  the  wire,  establishes 
communication  with  the  office  with  which  he  is  to  work,  and  begins  the  transmission  of  the  first 
message.  At  the  same  time,  with  his  left  hand,  he  marks  on  the  message  the  number  "1,"  and  the 
call  of  the  office  to  which  the  message  is  being  sent  fas,  for  instance,  "B"  in  the  case  of  Balti- 
more). When  he  is  completing  the  transmission  of  the  message  he  adds,  also  with  his  left  hand, 
the  time,  and  his  own  "sign."  The  entire  operation  is  simultineous  with  the  transmission  of  the 
message  and  occupies  no  additional  time.  The  first  thing  the  receiving  operator  writes  on  his 
receiving  blank  is  the  corresponding  number  of  the  message  and  the  sign  of  the  office  from  which 
it  is  sent  to  him.  The  sending  operator,  having  sent  message  No.  1,  is  supposed  to  mark  off  the 
number  "1"  on  the  number  sheet,  under  the  heading  "Sent,"  and  the  receiving  operator,  when  re- 


65 

ceiving  the  message,  to  mark  off  the  number  "1"  on  his  number  sheet,  under  the  heading  "Re- 
ceived." In  actual  practice,  where  there  is  a  series  of  messages  going  one  way  between  two  op- 
erators in  succession,  the  transmission  of  none  of  them  is  delayed  for  the  purpose  of  marking  off 
the  numbers  on  the  sheet,  but  at  the  completion  of  the  series  the  marking  off  of  the  correspond- 
ing numbers  is  done  in  one  operation,  which  consumes  no  more  than  a  second  or  so. 

When  either  the  sending  operator  or  the  receiving  operator  is  relieved,  the  operator  re- 
lieving him  notes  the  number  of  the  last  message  sent  or  received,  respectively,  and  if  he  be  the 
sending  operator,  assigns  the  next  following  number  to  the  first  message  which  he  transmits, 
which  the  receiving  operator  is  required  to  verify  from  his  record.  Each  operator  places  his  sign 
opposite  the  numbers  of  the  messages  which  he  has  transmitted  or  received,  respectively. 

Messages  may  be  lost  from  various  causes.  It  may  happen  that  a  sending  operator,  having 
placed  the  number  and  the  sign  of  the  distant  office  on  a  message,  is  in  some  way  interrupted, 
and  that  he  may  inadvertently  place  the  message  with  the  incomplete  sending  marks  with  the 
sent  business,  then  proceeding  with  the  next  message,  giving  it  the  next  following  number.  As- 
suming that  he  has  thus  erroneously  placed  the  message  No.  148  in  the  "sent"  business  without 
having  actually  transmitted  it  or  completed  its  transmission,  and  proceeds  to  transmit  the  next 
message,  giving  it  the  No.  149,  the  receiving  operator  will  challenge  the  incorrect  number,  thus 
preventing  the  loss  of  message  No.  148,  which  would  otherwise  have  occurred.  It  may  happen 
that  in  the  course  of  the  transmission  of  a  series  of  messages  between  two  points  the  wire  is 
temporarily  interrupted  by  an  intennediate  ground  or  from  any  one  of  a  number  of  possible  causes. 
The  sending  operator  frequently  has  no  means  of  knowing  that  his  signals  are  no  longer  reach- 
ing the  distant  office  and,  if  the  interruption  occurs  between  messages,  the  receiving  operator  can- 
not tell  whether  the  ensuing  pause  is  one  occurring  naturally  in  the  course  of  intervals  between 
messages,  or  whether  it  is  due  to  temporary  wire  failure.  The  sending  operator,  in  the  mean- 
time, continues  to  send  his  messages,  and  the  fact  that  they  did  not  reach  their  destination  can- 
not be  detected  until  the  wire  is  restored.  The  next  number  given  the  receiving  operator  reveals 
the  gap.  He  challenges  the  number,  gives  the  sending  operator  the  last  number  which  he  has 
received,  and  the  missing  messages  are  thus  easily  identified  and  retransmitted.  If  the  numbering 
were  eliminated,  as  suggested  by  Mr.  Lewis,  the  loss  of  the  messages  might  not  be  discovered  at 
all,  and  if  it  were  discovered  by  chance,  the  description  over  the  wire  of  the  messages  which  had 
reached  the  distant  office,  and  the  identification  of  those  which  had  not,  would  be  an  extremely 
laborious  and  time-consuming  process;  and  witli  the  volume  of  business  handled  in  important 
offices,  would  in  the  end  give  no  assurance  of  a  correct  result,  particularly  as  all  messages  are 
removed  from  the  operators'  tables,  for  filing  or  distribution  to  other  wires,  as  quickly  as  tliey  are 
disposed  of. 

The  accurate  use  of  tlie  number  sheet  is  specially  important  at  the  time  when  one  operator 
relieves  another.  It  is  customary  for  the  relieving  operator  to  be  at  the  wire  before  the  relieved 
operator  leaves  it,  but  there  may  be,  on  occasions,  a  short  interval,  and  the  number  slieet  pre- 
vents the  loss  of  any  messages  which  may  be  sent  from  the  distant  sending  office  in  the  interim. 
At  the  close  of  the  day,  the  offices  which  have  worked  with  each  other  compare  numbers  from 
the  number  sheets,  as  an  additional  check  that  no  messages  have  gone  astray  or  failed  between 
them.  The  Telegraph  Companies  apply  the  most  drastic  discipline  to  any  operators  failing  to 
observe  strictly  the  rules  with  reference  to  the  checking  of  numbers  on  number  sheets.  In  spite 
of  this,  it  has  occasionally  occurred  that  messages  have  been  lost  through  negligence  of  operators 
in  this  very  respect.  The  extent  to  which  losses  would  occur,  in  the  complete  absence  of  a  muri- 
bering  system,  can  only  be  conjectured. 

Secondary  functions  of  tlie  numbering  system  are  the  following: 

The  numbers  of  the  messages  afford  a  brief,  convenient  and  absolutely  safe  way  of  identi- 
fying them  when  it  is  necessary  to  refer  to  them  in  service  messages  asking  repetition,  or  the 
verification  of  specified  text  words,  or  reports  of  delivery,  etc.,  more  particularly  in  communica- 
tions between  chiefs  when,  on  account  of  some  mishap  in  the  operating  room,  a  quick  repetition 
of  the  message  is  required. 


66 

The  number  sheets,  showing  how  many  messages  have  been  handled  by  each  operator, 
afford  a  most  important  means  of  gauging  the  efficiency  of  individual  operators  as  affecting  their 
rating.  It  enables  the  traffic  chief  to  judge  whetiicr  an  operator  is  capable  of  handling  the  volume 
of  business  passing  over  the  wire  to  which  he  is  assigned,  or  if  the  capacity  of  the  operator  be 
established,  to  judge  whether  he  is  perfonniiig  his  full  duty,  and  thus  prevent  avoidable  delays 
in  traffic.  It  thus  plays  an  important  part  in  enabling  the  chiefs  to  assign  the  operators  so  that 
the  best  use  can  be  made  of  the  wire  facilities,  and  also  in  maintaining  the  efficiency  of  individual 
employes. 

The  number  sheet  is  an  automatic  record  of  the  number  of  messages  handled  in  the  operat- 
ing room,  and  affords  the  cheapest,  easiest  and  most  accurate  way  of  obtaining  the  statistics 
which  are  necessary,  in  order  to  check  the  operating  cost,  and  to  prevent  extravagance  in  opera- 
tion in  individual  offices. 

The  best  thought  of  experienced  telegraph  men  has  for  many  years  been  given  to  de- 
vising the  simplest  and  most  effective  means  of  protecting  the  service,  and  it  has  not  been  pos- 
sible to  find  any  expedients  which  are  as  effeaive,  and  as  little  wasteful  of  time,  as  the  estab- 
lished safeguards,  the  removal  of  which  Mr.  Lewis  suggests. 

ACCOUNTING    OPERATIONS. 

Mr.    Lewis   makes   the   statement   that   the  following  accounting  operations  would  give   way, 
under  public  management: 

Cashier  (Local). 

1.  Checks  up  and  balances  "receiving  clerk's  record"  of  messages. 

2.  Checks  up  and  balances  "delivery  clerk's  record"  of  messages. 

3.  Checks  up  and  balances  money-order  clerk's  sent-and-received  record. 

4.  Checks  up  "charge  accounts"  weekly  or  monthly  bills  of  customers  for  messages. 

5.  Turns  over  above  four  accounts  to  bookkeeper. 

6.  Checks  up  receiving  clerk's  record,  branch  offices. 

7.  Checks  up  delivery  clerk's  record,  branch  offices. 

Bookkeeper  (Local). 

8.  Records  cash   received,  daily  receiving  clerk's  record. 

9.  Records  cash  received,  daily  delivery  clerk's  record. 
10.  Records  cash  received,  "sent"  money  orders  record. 
IL  Records  cash  received,  "received"  money  orders  record. 

12.  Records  cash  received,  receiving  clerk's  record,  branch  offices. 

13.  Records  cash  received,   delivery  clerk's  record,  branch  offices. 

14.  Records  all  charge  accounts. 

15.  Records  payment  of  charge  accounts. 

16.  Makes  out  weekly  balance  sheet. 

Charge  Account  Clerk. 

17.  Makes  out  charge  accounts    (weekly  and  monthly). 

18.  Balances  with  bookkeeper. 

19.  Sends  out  bills  of  charge  accounts. 

Auditor's  Office  (Local). 

20.  Balances  with  cashier  "receiving  clerk's"  record. 

21.  Balances  with  cashier  "delivery  clerk's"  record. 

22.  Balances  with  cashier  "receiving  clerk's"  record,  branch  offices. 

23.  Balances  with  cashier  "delivery  clerk's"  record,  branch  offices. 

24.  Checks  up  number  sheets  of  main  and  branch  offices. 

25.  Keeps  book  record  of  branch  office  receipts. 


67 

26.  Inspects  "sent  messages"  to  see  that  they  all  bear  number,  time  and  operator's  sig- 
nature. 

27.  Makes  daily  record  of  messages  on  forms  supplied  for  "Sent  paid,"  "Sent  collect," 
"Received  paid,"  "Received  collect,"  for  public,  press  and  Government  accounts. 

28.  Statement  of  Goverrmient  messages  sent  paid,  for  Government,  for  general  auditor. 

29.  Statt-meiit  of  Government  messages  sent  collect,  for  Government,  for  general  auditor. 

30.  Statement  of  Government  messages  received  paid,  for  Government,  for  general  auditor. 

31.  Statement  of  Government  messages  received  collect,  for  Government,  for  general 
auditor. 

32.  Statement  of  messages  upon  which  are  "other  line"  toils,  for  general  auditor. 
Zi.     Makes  daily  check  sheets  for  eacli  city  (amount  of  tolls). 

34.  Makes  statement  of  "deadhead"  messages. 

35.  Makes  monthly  statement  of  uncollected  messages. 

36.  Sorts  all  messages  as  to  cities. 

27.  Sorts  all  messages  as  "sent  paid." 

38.  Sorts  all  messages  as  "received  paid." 

39.  Sorts  all  messages  as  "sent  collect." 

40.  Sorts  all  messages  as  "received  collect." 

41.  Figures  amount  of  tolls  on  each  message. 

42.  Files  all  njessages  by  dates. 

43.  Answers  all  check-error  sheets. 

44.  Makes  daily  statement  of  "sent"  press  report  (number  of  words  and  city). 

45.  Counts  number  of  words  in  "sent"  press  matter. 

46.  Makes  daily  statement  of  "received  collect"  press  matter. 

47.  Counts  number  of  words  in  "received  collect"  press  matter. 

At  the  outset,  it  should  be  pointed  out  that  there  is  no  "Auditor's  Office  (local)"  in  any 
individual  office.  The  functions  which  are  attributed  to  the  "Auditor's  Office  (local),"  insofar  as 
they  are  performed,  are  bookkeepers'  functions.  It  is  true  that  the  bookkeeper  performs  auditing 
functions,  but  the  auditing  features  of  his  activities  are  coincident  with  the  other  functions  which  he 
performs.  While  he  may  be  referred  to  as  a  "local  auditor,"  at  the  same  time  the  "local  auditor"  and 
the  bookkeeper  are  one  and  the  same  person. 

As  a  result  of  the  separate  classification  under  "Bookkeeper"  and  under  "Auditor's  Office 
(local),"  there  is  a  duplication   in   the  enumeration  of  processes. 

In  the  larger  offices,  constituting  less  than  10%  of  the  total  number  of  independent  Western 
Union  main  offices  (excluding  Branch  Offices  and  Railroad  Offices  where  no  such  organization  exists), 
there  is  a  cashier  and  a  bookkeeper.  In  that  proportion  of  the  remainder  of  the  offices  where  the 
employment  of  a  bookkeeper  is  warranted  by  the  amount  of  business  handled,  the  cashier's  func- 
tions, so  far  as  the  cash  is  concerned,  are  performed  by  the  manager,  and  so  far  as  the  reports 
and  records  are  concerned,  by  the  bookkeeper,  thus  consolidating  the  majority  of  the  functions 
which  in  Mr.  Lewis'  list  are  separately  enumerated. 

Assuming  an  office  sufficiently  large  to  have  a  cashier  and  a  bookkeeper,  and  checking  the 
items  enumerated  by  Mr.  Lewis  according  to  the  number  given  them  in  his  list,  and  remembering 
that  the  functions  attributed  to  a  local  auditor's  office  are,  if  at  all,  performed  by  the  bookkeeper: 

1,  2,  6  and  7:  The  cashier  doe"^  not  check  up  and  balance  the  receiving  clerk's  record  and 
the  delivery  clerk's  record  at  main  and  branch  offices.  These  are  one  and  the  same  operation, 
and  it  is  performed  by  the  bookkeeper. 

The  receiving  clerk  and  delivery  clerk  turn  their  cash  over  to  the  cashier,  but  their  regis- 
ters go  to  the  bookkeeper,  who  does  the  checking,  and  in  that  connection  simultaneously  obtains 
a  record  of  the  cash  received  according  to  the  registers.  Therefore,  numbers  8,  9,  12  and  13  are 
coincident  with  numbers  1,  2,  6  and  7  respectively,  and  represent  pure  repetition  in  tlie  enumera- 


68 

tion.  There  is  a  balancing  between  the  bookkeeper  and  the  casliier,  as  enumerated  under  20, 
21,  22  and  23,  but  this  consists  merely  of  a  comparison  by  the  cashier  of  the  totals  of  his  record 
of  cash  received,  and  of  the  totals  of  the  bookkeeper's  record  of  what  should  have  been  received, 
which  is  submitted  to  the  cashier. 

3:  There  is  no  checking  of  tlie  transfer  agent's  record  of  money  transfer  receipts  and 
pajinents  performed  at  the  local  office  except  where  there  are  special  transfer  agents,  which  is 
true  only  of  the  very  largest  offices.  At  these  offices  the  cashier  checks  the  transfer  agent's  bal- 
ance, which  is  taken  into  his  accounts,  at  the  end  of  the  month  only. 

There  are  less  than  10  offices  in  the  Eastern  Division  in  which  there  is  a  special  money 
transfer  agent,  and  possibly  less  than  30  offices  in  the  whole  country. 

In  all  other  cases  where  an  office  is  a  money  transfer  office,  the  manager  or  cashier  is  the 
transfer  agent,  and  perfomis  the  duties  described  as  those  of  the  "money  order  clerk." 

4:     This  item  is  correct. 

5 :  On  account  of  the  inaccuracies  in  the  items  preceding  No.  5,  this  statement  is,  of 
course,  also  inaccurate,  and  should  be  eliminated. 

6,  7,  8  and  9  are  covered  under  items  1,  2,  6  and  7. 

10:  The  bookkeeper  has  nothing  to  do  with  the  money  transfer  service.  The  cashier, 
however,  records  cash  from  money  transfer  receipts. 

11:  There  is,  of  course,  no  "Cash  Received"  on  "Received"  money  orders  record,  and 
this  item  should  be  eliminated. 

12  and  13  are  covered  under  items  1,  2,  6  and  7. 

14:  This  work  is  performed  by  the  cashier,  and  not  by  the  bookkeeper,  and  the  item  is 
correct  insofar  as  it  is  a  monthly  operation,  being  the  entry  of  totals  of  monthly  bills  rendered 
in  the  customers'  ledger. 

15:     This  appears  to  be  correct. 

16:  There  is  no  weekly  balance  sheet  prepared.  Perhaps  this  is  confused  with  the  daily 
summary  of  business  furnished  to  the  cashier. 

17  and  19:  In  the  very  large  majority  of  offices,  the  bookkeeper  does  this  work  himself, 
and  there  is  no  separate  "Charge  Account"  clerk,  as  distinguished  from  the  bookkeeping  depart- 
ment. In  the  very  largest  offices  there  m&y  be  a  special  bill  clerk  or  bill  clerks,  but  they  are  a 
part  of  the  bookkeeping  department. 

18:  As  the  making  out  of  the  bills  is  a  bookkeeper's  function,  as  covered  by  No  17,  the 
item  No.  18,  supposed  balancing  between  charge  account  clerk  and  bookkeeper,  falls  away,  be- 
cause that  would  be  in  fact  a  balancing  of  the  bookkeeper  with  himself. 

19:     Covered  under  item  No.  17. 

20,  21,  22  and  23  are  covered  under  items  Nos.  1,  2,  6  and  7. 

24 :  At  the  very  largest  cities  only  is  this  work  done,  and  then  in  connection  with  item  No. 
27.       -Xt  the  large  majority  of  offices  it  is  not  done,  as  it  is  covered  by  item  No.  27. 

25 :     Only  the  very  large  offices  maintain  this  record.    The  great  majority  of  offices  do  not. 

26:  The  inspection  of  messages  to  see  that  they  bear  the  number,  time  and  operator's 
signature  is  performed  in  the  operating  room.  Neither  the  bookkeeper  nor  any  "Auditor's  Office 
(local)"  has  anything  to  do  with  it. 

27:  This  is  substantially  correct,  except  that  the  function  is  performed  by  the  book- 
keeper, e       ,,      ■         ,  u 

28  29,  30  and  31 :  The  bookkeeper  makes  a  statement,  for  purposes  of  collection  through 
the  general  auditor's  office,  of  Government  messages  sent  paid  and  received  collect  (items  28  and 
31)  This  is  however,  a  single  statement  and  should  not  be  separated  into  two  separate  items, 
and,  further,  it  should  be  considered  a  part  of  item  No.  17,  in  the  same  way  as  any  other  charge 

account.  ,.  _ 

No  such  statement  is  made  of  Government  messages  sent  collect  or  Government  messages 

received  paid,  and  items  29  and  30  should,  therefore,  be  eliminated.  _^ 

32-  No  statement  is  made  of  messages  upon  which  there  are  other  line  tolls  for  the 
general  auditor.  (The  only  exception  is  in  the  case  of  wireless  messages,  where  settlements  are 
made  through  the  general  auditor,  an  abstract  being  prepared  by  the  coastal  stations  only.  This. 
of  course,  is  a  practically  negligible  proportion  of  the  total  business.)  There  used  to  be  such  a 
statement  many  years  ago,  but  it  has  long  since  been  abandoned. 


69 

33:  It  is  true  that  a  daily  check  is  made  by  the  bookkeeper,  but  this  is  done  by  daily 
entries  in  a  loose-leaf  ledger  account,  and  not  by  making  daily  sheets. 

34:  The  bookkeeper  makes  a  statement  of  "deadhead"'  messages,  but  this  statement  is 
made  once  at  the  end  of  each  month  only. 

35:  The  bookkeeper  makes  a  monthly  statement  of  uncollected  messages,  except  where 
there  are  less  than  five  such  messages. 

36,  Z7,  38,  39,  40  and  42:  The  bookkeeper  does  sort  all  messages  by  cities,  and  according 
to  whether  they  are  sent  paid,  received  paid,  sent  collect  or  received  collect,  and  files  them  by 
date,  but  this  in  the  average  office  is  all  one  operation.  In  the  very  largest  offices  (such  as  New 
York,  Chicago,  Pliiladelphia  and  other  large  cities),  there  are  two  processes  involved;  one,  the 
separation  of  the  messages  according  to  whether  they  are  sent  paid,  received  paid,  sent  collect 
or  received  collect  and  the  second  operation,  their  separation  according  to  cities.  The  arrang*- 
ment  by  dates  is  automatic  in  all  cases,  because  each  day's  business  is  handled  separately. 

41 :  The  bookkeeper  figures  amount  of  tolls  on  each  message.  This  is  correct,  but,  as  to 
the  cash  business,  is  an  incident  to  the  checking  and  receiving  clerk's  records.  As  to  messages  re- 
ceived paid  and  sent  collect,  it  is  an  incident  to  the  keeping  of  the  check  record  against  each 
city  (item  33). 

43:     Answers  all  check  error  sheets.     This  is  correct,  but  is  a  monthly  operation. 

44  and  46:  The  bookkeeper  does  make  a  daily  statement  of  "sent"  press  matter,  and  of 
"received  collect"  press  matter,  but  the  two  classes  of  messages  are  listed  in  one  operation,  and 
should  not  be  separated  into  distinct  functions. 

45  and  47 :  Counting  of  press  messages.  In  the  average  office  the  press  matter  is  counted 
by  the  operator,  and  in  the  average  office  the  operator's  count  is  accepted  by  the  bookkeeper.  In 
the  larger  offices,  the  bookkeeping  department  counts  such  press  matter  as  has  not  been  counted 
by  operators.  The  bookkeeping  department  counts  all  Press  Association  matter,  because  that  is 
not  counted  by  the  Press  Association  operators,  or  by  the  telegraph  company's  operators.  The 
counting  of  such  press  matter  is  an  incident  to  posting  the  tolls  in  the  Check  Ledger  (item  33). 

Statement  of  Actual  Daily  Accounting  Operations  at  Average  Western  Union  Independent  Main 

Offices. 

CASHIER. 

1.  Records  cash  received  from  branch  offices,  receivers  and  customers  and  on  money 
transfers. 

2.  Verifies  record  of  cash  received  with  bookkeeper's  daily  summary  and  posts  credits  to 
customers'  accounts. 

3.  Records  money  transfer  receipts  and  payments. 

4.  Maintains  daily  record  of  debits  and  credits. 

BOOKKEEPER. 

1.  Assorts  messages  into  "Receipts"  (Cash  and  Charged),  "Checks,"  "Dead  Heads"  and 
"Service  Messages." 

2.  Checks  receivers'  and  delivery  clerks'  registers. 

3.  Enters  charges  on  bills. 

4.  Assorts  messages  by  States  and  towns. 


70 


5.  Enters  message  tolls  in  check  ledger 

6.  Prepares  summary  of  daily  business. 

7.  Counts  and  classifies  messages  for  statistical  purposes. 

RECEIVERS  AND  DELIVERY  CLERKS,  M.\IN  AND  BRANCH  OFFICES. 

1.  Enter  "Sent  Paid"  and  "Received  Collect"  messages  on  receivers'  and  delivery  clerks' 
registers. 

A  statement,  showing  the  net  result  of  the  foregoing  criticism  of  Mr.  Lewis'  enumeration 
of  accounting  processes,  and  also  a  comparison  between  his  enumeration  and  the  actual  number 
of  daily  accounting  operations,  follows: 


Operations  on  Mr.  Lewis'  List. 


Disposition. 


Covered  on  .\ctual  List  of : 
Daily   Operations    under : 


1. 
3 
5 

10 
11 
14 
15 
16 
17 
18 
24 
25 
26 
28 
29 
32 
33 
34 
35 
36, 
41 
43 
44 
45 


2,  6,  7,  8,  9,  12,  13,  20,  21,  22  and  23. 


and  19. 
and  27'. 


and  31. 
and  30. 


yi,  38,  39,  40  and  42. 


and  46. 

and  47. 


Eliminated 
Eliminated 


Eliminated 
Monthly  Operation 


Eliminated 


Not  kept  at  average  office 
Eliminated 


Eliminated 
Eliminated 


Monthly  Operation 
Monthly  Operation 

Eliminated 
Monthly  Operation 


Cashier  1  Bookkeeper 

Cashier  3 

Cashier  2 
Bookkeeper  6 
Bookkeeper  3 

Bookkeeper  7 
Bookkeeper  3 
Bookkeeper  5 
Bookkeeper  1  and  4 


Bookkeeper  7 
Bookkeeper  S 


SUMMARY. 

Operations  enumerated  on  Mr.  Lewis'  list 47 

No.  of  actual  daily  operations ^2 

Difference   ^5 

Accounted  for  as  follows : 

Eliminated  ' 

Consolidated     22 

Monthly  Operation   ^ 

35 

Less : 

Operations  not  covered  by  Mr.  Lewis ^ 

Mr.  Lewis'  suggestions  concerning  the  elimination  of  accounting  processes  are,  of  course, 
based  on  the  assumption  of  the  use  of  stamp  for  the  purpose  of  paying  tolls  on  messages. 
The  more  important  consideration  in  dealing  with  this  phase  of  the  matter  is,  therefore, 
whether  the  use  of  stamps  in  connection  with  telegraph  traffic  in  this  country  is  feasible.  The 
result  of  applying  the  stamp  system  would  necessarily  be  to  place  the  service  on  a  strictly  cash 
basis.  Every  message  would  have  to  be  either  prepaid  with  stamps  when  filed,  or  paid  for,  m 
accordance  with  due  stamps,  by  the  addressee.  It  would  eliminate  any  comprehensive  facilities 
for  the  acceptance  of  messages  over  the  telephone,  and  it  would  also  eliminate  all  charge  ac- 
counts. 


71 

The  \\'estern  Union  Company  statistics  show  tliat  in  the  month  of  October,  1913,  at  so- 
called  test  offices  (331  offices),  2,553.625  messages  were  filed  at  the  counter,  2,161,919  were  col- 
lected by  messengers,  and  606,126  messages,  representing  11.4%  of  the  total  nmnber  of  messages 
filed,  were  filed  by  telephone.  The  acceptance  of  messages  over  the  telephone,  of  course,  in- 
volves the  extension  of  credit  to  the  person  filing  the  message.  The  method  in  which  the  tolls 
are  collected  in  connection  with  telephone  bills  is  familiar.  The  percentage  of  messages  thus  filed 
is  some  indication  of  the  extent  to  which  the  public  has  accepted  and  makes  use  of  this  facility. 
Particularly  in  rural  communities,  where  a  person  wishing  to  send  a  message  may  be  located 
at  a  considerable  distance  from  the  telegraph  office,  the  use  of  the  telephone  for  filing  mes- 
sages is  practically  indispensable,  and  under  less  rigorous  conditions,  it  has  been  found  to  be  a 
great  advantage  to  the  telegraph-using  public.  In  view  of  the  present  development  and  the  prob- 
able normal  growth  of  the  practice,  as  its  advantages  become  more  and  more  apparent,  it  is 
doubtful  whether  the  people  would  tolerate  the  abolishment  of  this  convenience.  On  the  other 
hand,  if,  under  a  stamp  system,  the  practice  of  accepting  messages  over  the  telephone  is  to  be 
continued,  it  will,  of  necessity,  just  as  it  does  now,  involve  the  extension  of  credit  and  the 
keeping  of  such  records  as  are  necessary  to  keep  a  proper  account  of  the  amounts  due,  and  to 
enforce  their  collection. 

The  business  community  generally  has  become  accustomed  to  the  convenience  of  a  telegraph 
charge  account,  because  it  simplifies  the  processes  of  filing  a  message  for  the  customer.  A 
charge  account  customer  can  send  his  message  to  the  telegraph  office  by  messenger,  or  in  any 
way  in  which  he  prefers.  He  need  not  consult  any  tariffs,  he  need  not  "count"  his  message.  The 
correct  amount  of  the  tolls  will  be  determined  when  the  message  is  received  at  the  telegraph 
office  and  the  proper  charge  made  against  his  account.  Where  telegrams  are  filed  in  rapid  suc- 
cession as,  for  instance,  in  the  case  of  firms  dealing  on  Exchanges,  and  seconds  are  important, 
the   elimination   of   unnecessary   processes   on  the  part  of  the  customer  is  indispensable. 

In  the  case  of  the  cash  customer  who  files  his  message  at  the  counter,  the  affixing  of 
stamps  would  merely  substitute  certain  processes  not  now  employed  for  some  of  the  existing 
ones.  Receiving  clerks  would  have  to  procure  stamps  from  some  central  distributing  bureau. 
That  bureau  would  have  to  keep  accounts  of  the  stamps  received  by  it,  and  of  the  stamps  dis- 
tributed to  receiving  clerks.  The  receiving  clerk  would  still  have  to  count  each  message  to  de- 
termine the  proper  amount  of  the  charges.  Instead  of  then  simply  taking  the  cash  for  tlie 
amount,  he  would  liave  to  go  through  the  process  of  selling  stamps  to  the  customer  who,  in 
turn,  would  have  to  affix  them  to  the  message.  The  receiving  clerk  would  be  obliged  to  keep 
account  uf  ihc  nunilie-r  of  stamps  furnished  him  and  of  the  number  sold,  in  order  that  the  cash 
on  hand  might  be  ascertained,  to  correspond  with  the  difference.  The  essential  processes  of 
determining  the  charge  on  the  message  and  collecting  the  charge  from  the  customer  would  be 
the  same  as  now. 


72 


APPENDIX    C. 

LETTER  CONCERNING  THE  AMALGAMATION  OF  POST  OFFICE 

AND  TELEGRAPH  ORGANIZATIONS  IN   EUROPE. 

"Stockholm,  Dec.  18th,  1913. 
"Dear  Sir: 

Concerning  the  question  of  amalgamating  the  Post  and  the  Telegrapli,  you  expressed  a  desire 
to  know  Count  Hamilton's  personal  views  on  this  point.  I  am  now  in  a  position  to  give  you  a 
translation  of  some  opinions  in  a  statement  signed  by  him  and  handed  in  to  the  Government  in  con- 
nection with  a  report  of  a  Committee  that  had  proposed  some  changes  in  the  organization  of  our 
government  departments  and  also  hinted  at  the  possible  advantages  of  a  fusion  of  the  Post  and  Tele- 
graph. The  passage  in  the  statement  reads  as  follows:  *  *  *  The  Commissioners  have  also 
brought  up  the  old  and,  in  the  opinion  of  the  Telegraph  Administration,  long  ago  abandoned  ques- 
tion of  amalgamating  the  Telegraph  and  Post  departments  into  one,  though  the  Commissioners  de- 
clare that  they  are  not  convinced  that  the  present  time  is  fully  suited  for  the  realization  of  such  an 
amalgamation.  The  Comm:s  therefore  do  not  give  a  full  statement  of  the  use  and  the  advisability 
of  the  fusion,  but  emphasize  that  experience  from  abroad  decidedly  suggests  lliat  an  extended  union 
between  the  Telegraph  and  Post  departments  under  ordinary  circumstances  could  be  advantageously 
realized,  and  that  a  common  administration  for  these  two  departments  is  theoretically  the  best  form 
of  organization.  The  present  circumstances,  that  were  not  to  be  considered  as  ordinary,  should  con- 
sist of  the  fact  that  an  important  work  is  going  on  within  the  Telegraph  department  with  respect  to 
the  uniform  organization  of  the  Telephone  system.  Affirming  the  statement  as  to  the  circumstances 
and  expressing  the  hope  that  the  work  of  organization  within  the  Telegraph  department,  the  growth 
of  which  is  so  sensitive,  may  never  slacken,  the  Telegraph  Administration  in  this  connection  dares 
to  pronounce  the  apprehension  that  by  eventually  satisfying  the  desire  of  taking  examples  from 
abroad  in  the  aforesaid  question,  difficulties  arise,  which  easily  may  happen  when  foreign  models  are 
replanted  in  our  own  soil,  that  is  to  say  that  when  the  transplantation  is  once  effected,  the  foreign 
prototypes  have  in  the  meantime  vanished  and  have  been  replaced  just  by  that  which  was  rejected 
by  us  at  home.  An  expert  delegated  from  the  English  Post  and  Telegraph  departments,  having 
studied  these  matters  during  a  long  time  in  European  states,  on  his  visit  to  Stockholm  last  summer, 
expressed  an  opinion  little  agreeing  with  that  expressed  by  the  Commissioners.  In  a  letter  of  a 
later  date  the  following  interesting  information  is  given : 

'I  have  had  the  advantnge,  during  the  past  18  months,  of  having  visited  many  of  the  European 
countries  and  of  having  met  many  officers  of  the  Postal  and  Telegraph  services  in  these  countries.  I  have 
found  that,  in  every  country  I  have  visited,  there  is  a  consensus  of  opinion  that  today  the  Postal  De- 
partment should  be  administered  separately  from  the  Telegraph  and  Telephone  Department,  and  in  those 
countries  in  which  the  Post,  Telegraphs  and  Telephones  are  combined  under  one  Administration  in  theory, 
I  have  found  that  at  headquarters  the  Administration  of  the  Posts  is  separated  in  practice  from  that  of 
the  Telegraphs  and  Telephones;  and  that  this  separ.ition  extends  in  many  cases  to  the  Provincial  Admin- 
istrations. As  you  are  aware,  two  Royal  Commissions  have  recently  investigated  the  organization  of 
the  Posts,  Telegraphs  and  Telephones  in  Italy,  where  at  the  present  time  the  Telephones  arc  under  an 
Administration  separate  from  that  of  the  Post  and  Telegraphs.  It  has  been  strongly  urged  by  these  Royal 
Commissions  that  the  Telegraphs  should  be  separated  from  the  Posts  and  placed  with  the  Telephones; 
and  that  in  future  the  Postal  Department  should  constitute  an  Administration  separate  from  that  of  the 
Telegraphs   and   Telephones.' 

"From  this  might  be  concluded  that  the  tendency  abroad — if  attention  necessarily  must  be  paid 
to  matters  abroad — goes  in  a  direction  totally  different  from  that  supposed  by  the  Comm  :s.  The 
opposite  would  just  have  been  miraculous.     Considering  the  development  of  later  years  characteriz- 


71 

ing  not  only  the  telephone  but  nowadays  also  the  telegraph,  the  combination  of  the  exclusively  tech- 
nical Telegraph  Department  with  the  exclusively  administrative  Post  Department  would  be  an  ex- 
tremely unpractical  proceeding.  The  advantages  that  in  some  respects  could  be  realized  by  the 
amalgamation,  and  which  are  incidentally  referred  to  by  the  Comm:s,  possess  a  worth  that  is  com- 
paratively insignificant;  and  that  may  be  gained  very  easily  without  the  risk  of  the  great  incon- 
veniences that,  according  to  the  opinion  of  the  Telegraph  Administration,  an  amalgamation  would 
bring  to  both  of  the  departments  threatened.  Moreover,  the  Comm:s  themselves  point  out  that  al- 
ready, at  the  present  time,  a  good  deal  is  done  in  favor  of  the  public  in  the  respect  referred  to  by 
the  Comm:s.  The  Telegraph  Administration  can  add  to  this  that  still  more  will  be  done  in  the 
same  direction,  though  in  a  simpler  and  more  practical  way  than  that  suggested  by  the  Comm:s, 
with  proposed  meetings  of  the  chiefs,  reporting  traffic  division  chiefs  from  both  sides,  minutes,  and 
so  on.  The  Post  and  Telegraph  Committee  of  1902  did  not  either  mention  a  word  regarding  the 
question  of  amalgamation,  probably  because  already,  at  that  time,  it  was  considered  that  it  had 
been  got  rid  of  for  good  on  account  of  the  unwillingness  of  the  Committee  of  1902  to  realize  it. 
Thus,  not  having  been  considered  even  at  an  earlier  stage  possible  to  carry,  it  would  be  still  un- 
happier  to  try  it  now  or  in  the  future  when  the  development,  which  is  fortunately  swelling  year  by 
year  on  both  sides,  is  also  yearly  claiming  an  ever  more  intensive  management." 

Faithfully  yours, 

(Sd.)     Ernst  Halling,  Statistician." 


74 


APPENDIX     D. 
TELEGRAPH  AND  TELEPHONE  DEFICITS  UNDER  GOVERNMENT 

OPERATION 

The  facts  concerning  the  financial  results  of  government  operation  of  telegraphs  and  tele- 
phones are  difficult  to  ascertain,  not  only  because  the  expense  accounts  of  the  two  services  are  usually 
consolidated  (and,  in  some  cases,  are  also  combined  with  those  for  the  postal  services  as  well),  but 
also  because  the  system  of  accounting  adopted  often  fails  to  differentiate  between  capital  and  cur- 
rent expenditure.  However,  some  definite  information  is  available  on  this  subject,  and,  in  addition, 
a  great  deal  of  data  which  indicates  the  probable  facts  in  a  general  way.    This  information  follows: 

GENERAL 

Comments  Concerning  the  Earning  Capacity  of   European    Telegraph    and    Telephone    Admin- 
istrations. 

From  Editorial  Review  of  the  Year  1901.  in  the  "Journal  Telegraphique,"  January  25,  1902, 
(Translation)  : 

"As  stated  above,  the  telephone  has  become  the  rival  of  the  telegraph  and  tends  to  diminish 
the  telegraph  revenues.  One  would  be  inclined  to  conclude  that  this  riva'ry  is  detrimental  to  the 
interests  of  the  telegraph  service  only  in  countries  in  which  the  telephone  service  is  still  operated 
exclusively  by  private  enterprise,  whereas  it  is  not  of  great  consequence  in  states  in  which  both 
the  telephone  and  the  telegraph  services  are  in  the  hands  of  the  government,  provided  that  the  de- 
crease which  the  rivalry  causes  in  the  revenues  of  one  service  is  offset  by  an  increase  in  the  revenues 
of  the  other.  This  conclusion  would  be  justified  if  the  revenues  of  the  telephone  service  were 
sufficient  not  only  to  cover  its  own  expenses,  but  also  to  palliate  the  loss  in  telegraph  revenues.  But, 
unfortunately,  such  is  not  the  case,  for  only  a  very  small  number  of  Administrations  succeed  in 
covering  the  expenses  of  both  services  *  *  *  It  is  a  fact  that  the  traffic  of  the  two  services  does 
not  increase  as  rapidly  as  the  expenses  incurred  for  the  construction  and  the  extension  of  the 
systems  and  that  this  traffic  becomes  from  day  to  day  less  productive,  due  to  the  constant  reduc- 
tions in  rates-  which  the  .Administrations  are   forced  to  effect." 

From  a  monograph  by  Dr.  Hans  Schwaighofer,  a  German  authority.     (Translation) : 

"The  reasons  why,  from  year  to  year,  not  only  in  Germany  but  in  almost  all  countries,  sub- 
sidies for  the  telegraph  service  are  necessary,  are  various.  Probably  the  main  reason  is  that 
*    *     *     the  rates  were  originally  based  upon  entirely  erroneous  assumptions."  "* 

AUSTRIA 

No  information  is  available  as  to  the  financial  results  of  either  the  telegraph  or  the  telephone 
service,  but  the  combined  postal,  telegraph,  and  telephone  services  produced  (1912)  a  deficit  of  about 
$500,000."  As  the  postal  service  is  generally  conceded  to  be  profitable  in  Europe,  it  is  very  probable 
that  this  deficit  results  from  telegraph  or  telephone  operation,  or  both,  on  which,  therefore,  the 
deficit  is  probably  greater  than  $500,000. 

BELGIUM 
No  information. 

DENMARK 
From  1876-77  until  1902-03,  the  combined  telegraph  and  telephone  services  showed  annual 
deficits,  but  since  that  date  the  published  receipts  have  exceeded  the  published  expenses  by  about 
15%.  In  reply  to  an  inquiry,  however,  the  Administration  explains  that  no  charges  for  interest  or 
depreciation  are  included  in  the  published  expenses,  so  that  the  published  profit  is  fictitious.  It  is 
significant  that  the  net  result  of  the  telegraph  and  telephone  operations  from  1876  to  1911,  even 
without  allowing  for  interest  or  depreciation,  was  a  loss  of  about  $395,000.»' 

FRANCE 

Telegraphs. 

Senator  Emile  Dupont  states  (1911),  in  an  official  report  on  the  Budget  (i.e.,  Appropriation 
Bill),  that  the  entire  telegraph  service  is  operated  at  a  loss.'"*  In  discussing  this  loss,  he  refers  to 
the  official  report  on  the  Budget  of  1905,  made  by  -M.  Sembat.  as  Secretary  of  the  House  of  Deputies 
Budget  Committee,  in  which  Sembat  estimated  the  loss  on  the  telegraph  service  in  1905  at  $1,880.000., 
or  about  23%  of  the  telegraph  revenue.    This  estimate,  Senator  Dupont  thinks,  is  conservative.'" 


75 

Telephones. 

M.   Scmljat,  in  the  report  just  referred  to,  estimated  a  deficit  in  the  telephone  service  of  $380,- 

000.,  or  over  5%.'"' 

GERMANY 

February  15,  1901,  Representative  Paasche  stated  in  the  Reichstag  that,  according  to  a  com- 
munication from  the  Secretary  of  State  for  the  Post  Office,  the  German  telegraphs  required  a  subsidy 
of  $3,500,000.  per  annum,  including  charges  for  depreciation  and  interest  on  capital.  This  was  about 
45^0  of  the  telegraph  revenue  for  1900."' 

March  27,  1912,  Secretary  of  State  for  the  Imperial  Post  Office  Kraetke  stated  in  the  Reich- 
stag: "The  gentlemen  know  that  tlic  Telegraph  Administration  operates  at  a  very  heavy  loss" 
(Translation.)'"* 

GERMANY-BAVARIA 

A  special  report  of  the  Imperial  Post  Office,  published  in  1908,  states  that  the  loss  on  the 
telephone  service  in  Bavaria  is  150,000  marks  per  annum.  This  loss,  however,  appears  to  result  from 
the  toll  service,  as  the  report  shows  a  net  profit  from  the  exchange  ser\'ice.  The  total  loss  on  the 
toll  service  is  250,000  marks  per  annum."" 

GREAT  BRITAIN 

From  "The  Post  Office.  An  Historical  Summary,"  published  by  the  Postmaster-General  of 
Great  Britain  in  1911:"' 

"At  no  time  has  the  revenue  from  the  telegraph  service  been  sufficient  to  pay  the  interest  on 

the  capital;    and   for   tlie  lasi  twenty   years  the  service    has    been    carried    on    at    a    considerable 

loss.    ♦    *    * 

"From   1892  onwards  the  balance  sheet  has  regularly  shown  a  deficit    *    *    *    ;   _ 

"The   largest    deficit   hitherto    recorded   occurred  in  1903-4  when  it  amounted  to  957,782£.     In 

1909-10  it  was  858,314£  or  1,130,005£  including  the  interest  on  stock." 

From  First,  Second,  and  Third  Reports  from  the  Committee  of  Public  Accounts,  1910:"' 
Sir  John  Brigg: 

"To  have  established  a  capital  account  for  telegraphs  would  have  involved  the  valuation  of 
the  assets  of  the  undertaking  at  the  present  time,  and  the  inter-departmental  Committee  on  which 
I  sat,  on  which  the  Treasury  were  represented,  and  on  which  we  had  Mr.  Peat,  the  then  President 
of  the  Chartered  Accountants,  recommended  in  the  circumstances  that  it  was  not  worth  to  incur 
the  huge  expense  of  a  valuation  and  that  for  telegraphs  we  should  dispense  with  the  capital  ac- 
count. One  reason  why  that  was  recommended  was  that  we  knew  the  loss  was  about  a  million 
(i)  a  year,  and  it  was  not  very  encouraging." 

Tlie  telegraph  deficit  in  the  year  1912-1913  was  officially  reported  as  £957,566  ($4,653,771). 
This  was  about  307o  of  tlie  receipts."" 


No  information. 
No  information. 


ITALY 


HUNGARY 


NETHERLANDS 

The  telegraph  service  resulted  in  1912  in  a  deficit  of  Fl. 1,670,228   ($671,431.)  or  about  62% 
of  the  telegraph  receipts.'" 

NORWAY 

No  information. 

SWEDEN 

From  Report  of  Walter  F.  Burgess  to  Chicaj^o  City  Council,  April   1907: 

"The  manner  in  which  the  figures  of  the  (Telegraph  and  Telephone)  Department  are  pre- 
sented, and  the  padding  of  the  'assets'  is  an  excellent  example  of  the  way  in  which  the  figures  of 
many  of  the  continental  Telephone  and  Telegraph  Departments  are  presented  and  there  can  be  no 
doubt  that  if  the  Telegraph  and  Telephone  Department  made  proper  allowance  for  depreciation 
upon  its  property  and  was  obliged  to  create  a  sinking  fund  and  pay  interest  for  all  moneys  which 
it  has  obtained  at  different  times,  the  alleged  profit  which  it  shows  at  the  present  time  would  be 
converted   into  a   deficit." 


76 

SWITZERLAND 

From  ^[essage  of  the  Swiss  Federal  Council  to  the  Federal  Assembly,  December  20,   1909. 

(Translation)  : 

"The  average  receipt  from  a  domestic  telegram  (65.7  centimes)  is  considerably  below  the 
average  cost  for  all  kinds  of  telegrams  (745  centimes),  and  this  proportion  grows  worse,  if  we 
make  the  comparison  with  ihc  cost  ol   a  domestic  telegram  only  (at  Uast  !^0  ccntiims).'"" 

The  deficit  on  domestic  telegraph  traffic  is,  therefore,  about  22%   of  the  receipts  therefrom. 

The  loss  on  the  telephone  service  from  1901  to  1909  was  3,613,953  Francs  (about  $700,000.). 

This  was  about  14^  of  the  telephone  revenue  for  the  same  period." 


112 


AUSTRALIA 

In  1910  a  Royal  Commission  on  Postal  Services  made  the  following  statements  concerning  the 

financial  results  of  the  Australian  Post  Office  Department:"' 

".■Xccepting  the  most  liberal  reading  *  *  *  the  estimated  loss  on  the  transaction  of  the 
Department  from  the  inception  of  the  Commonwealth  to  June  30,  1909,  amounted  to  at  least 
£2,300,000   ($11,190,000.). 

************** 

"The  information  furnished  would  make  it  appear  certain  that  the  postal  section  of  the 
Department  returns  a  profit  as  a  whole  but  the  extent  of  such  profit  was  not  ascertainable.    »    •    * 

"Your  Commissioners  therefore  conclude  that  the  Department's  unsound  financial  position  is 
due  to  the  fact  that  telegraphic  and  telephonic  services  are  rendered  a'  rates  which  do  not  return 
revenue  sufficient  to  cover  all  charges  against  capital  account,  and  working  expenses. 

************** 

"Consequently  the  postal  section  of  the  Department  has  to  assist  in  carrying  the  financial 
burden  of  the  telegraph  and  telephone  sections.  This  is  distinctly  inequitable,  and  the  result  is  that 
the  mail  facilities  to  outlying  districts  suffer  curtailment,  while  telegraphic  and  telephonic  facilities 
are   furnished  at  a  loss.    »    *    * 

"Your  Commissioners  endeavored  to  obtain  the  above  mentioned  information  with  the  object 
of  definitely  establishing  which  were  paying  and  which  were  non-paying  branches  of  the  Department, 
and  of  showing  the  relative  extent  to  which  they  were  paying  or  non-paying.  The  Accountant  in 
New  South  Wales  estinuted  the  cost  of  earning  II  of   revenue  to  be  as    follows: 

Postal  Ser^•ice  £0        14        10 

Telegraph   Service    1  9  6 

Telephone  Service   1  5  0 

"The  only  other  information  on  this  subject  was  supplied  by  the  South  .Australian  representa- 
tive of  the  Commonwealth  Auditor-General,  who  had  for  many  years  been  associated  with  the  .Ac- 
counts Branch  in  New  South  Wales.  This  witness'  estinvate  of  the  cost  of  obtaining  £1  of  revenue 
in  South  Australia  was  as  follows : 

Postal  Service  £0        15        10 

Telegraph   Sen-ice    1  1  5 

Telephone  Service  1  3  2 

"In  addition  to  the  figures  quoted,  the  Chief  Electrical  Engineer  stated  that  to  obtain  £1 
of  revenue  from  the  telephone  service  involved  an  expenditure  of  £1  7s.,  exclusive  of  sinking 
fund." 

It  will  be  noted  that  these  official  estimates  of  deficits  in  telegraph  and  telephones  are  in  pro- 
portion as  follows: 

Per  Cent,  of  Deficits  to  Revenue. 
Telegraph.     Telephone. 

New  South  Wales ■ 47.5  25.0 

South  Australia  ' -^  ^^-^ 

Australia    ^^•" 

Another  official  report  shows  that  the  results  of  the  operation  of  the  entire  postal  services  for 
the  year  ended  June  30,  1913,  was  a  deficit  of  £407.102  ($1,982,587.).  This  loss  was  9.67o  of  the 
total  Postal  Department  revenue,  and  was  the  result  of  lieavy  deficits  in  both  the  telegraph  and 
telephone   branches,   as    follows:"  "^ 

TeWrat>hs  ■ £164.108     ($799,206.) 

riSncs :;;:;::::::::::::::: ^^'^757  ($1,079,956.) 

%  of  telegraph  loss  to  telegraph  revenue ^• 

%  of  telephone  loss  to  telephone  revenue "•' 

NEW  ZEALAND 

The  following  statistics  show  the  annual  losses,  in  recent  years,  in  the  New  Zealand  telegraph 

and  telephone  toll  services,  which  are  not  separated  as  to  expense.     The  net  results  shown  below,  it 

will  be  noted,  are  exclusive  of  interest  charges  which,  if  taken  into  account,  would  materially  increase 

the  deficits  shown: 


77 


Year 
Ended 

Total  Value  of 

Telegraph  and 

Telephone   Toll 

Business. 

Total  Telegraph 
and  Telephone 
Toll  Expendi- 
ture  (exclud- 
ing    interest 
charges). 

Official    Net   Profit    (excluding   in- 
terest  charges)    of    the    Com- 
bined Telegraph  and  Tele- 
phone Toll  services. 

March  31. 

1908 

1909 

1910 

I 

231,897 
242,925 
255,063 
277,817 
300,166 

t 

275,757 
307,166 
322,485 
344,046 
364,613 

i                                     $ 
-~  43.860                     —   213.160 

-  64,241                      —   312,211 

-  67,422                     —   327,671 

—  66,229                     —   321,873 

—  64,447                     —   313,212 

1911 

1912 

Totals 

1,307,868 

1,614,067 

—306,199                     —1,488,127 

The  loss  in  1912  was  about  21.3^  of  the  revenues,  and  for  the  five  year  period  was  about  23.4% 
of  the  revenues. 

The  above  statistics  were  computed  from  those  published  in  the  Annual  Reports  of  the  Post  and 
Telegraph  Department,  New  Zealand,  and,  to  avoid  errors  due  to  possible  misinterpretation  of  the 
reports,  were  submitted  by  letter  to  the  General  Post  Office,  New  Zealand,  for  verification.  The  fol- 
lowing is  part  of  the  reply  from  the  Secretary: 

"The  result  arrived  at  by  you  in  connection  with  the  loss  on  the  combined  telegraph  ana 
telephone  toll  services  is  correct.  The  deficit  for  the  combined  services,  after  the  value  of  free 
government  work  is  taken  into  account,  amounts,  as  you  say,  to  £64,447. 

"Your  assumption,  that  the  deficit  is  due  to  the  rates  being  too  low,  is  also  correct.  It  has 
been  found  from  specially  computed  statistics  that  the  only  classes  of  telegrams  which  are  profi,t- 
able  to  the  Department  are  'Urgent'  and  bureau  messages." 


i 


78 


APPENDIX     E. 

RELATIVE   VALUE  OF  MONEY  IN   FOREIGN  COUNTRIES 
AND  IN  THE   UNITED  STATES,  AS  REFLECTED  IN  THE  WAGES 

OF  TELEPHONE  OPERATORS. 

COMPARISON  OF  THE  WAGES  OF  ORDINARY  DAY  SWITCHBOARD  OPERATORS. 


These  wages  are  here  represented  by  the  minimum  wage  (,on  beginning  full  active  service)  and  the  wage  at  the  end 
of  three  years  of  sen-ice  in  the  largest  exchange  in  each  coun'.ry. 


Country. 


Laigest  Elxchange. 


Minimum  Weekly  Wage. 


Actual. 


E.xpressed  in 

per  cent., 

United  States 

Figure  being 

100%. 


Weekly  Wage  at  end 
of  Three  Years. 


Actual. 


Expressed  in 

per  cent., 

United  States 

Figure  being 

1007o. 


Austria 

Belgium 

Denmark 

France 

German  Empire 
Great   Britain.. 

Netherlands 

Norway 

Sweden : 

State 

Company 

Switzerland 

United  States. . . 


Vienna 

Brussels 

Copenhagen 

Paris 

Berlin 

London 

Amsterdam 

Christiania 

Stockholm 
Stockholm 
Zurich 
New  York 


$3.00 
2.60 
2.50 
4.10 
3.95 
2.65 
320 
3.70 

3.10 
3.10 
520 
6.00 


50% 
43% 

42% 
68% 
667o 
44%, 
53% 
62% 

S27o 

52% 

87% 

100%, 


$3.30 

3,35 

3.40 

4.45 

4.60 

5.50* 

7.20 

4.00 

4.00 

4.00 

6.70 

10.00 


33% 
34% 
34% 
45% 
46% 
55% 
72% 
40% 

40% 

40% 

67% 

100% 


*Only  if  the  operator  is  22  years  of  age  or  over;  it  operator  is  less  than  22  years  of  age,  Iier  wage  is  less 
than  this  figure. 


79 


APPENDIX    F. 
HISTORY  OF  TELEGRAPH  RATES. 

OUTLINE  OF  THE  HISTORY  OF  ORDINARY  TELEGRAPH   RATES    IN  THE  UNITED 
STATES.'" 

The  fundamental  basis  of  the  Western  Union  rate  schedule  consists  of  "state"  rates  and 
"square"  rates,  the  squares  used  for  rate  purposes  having  dimensions  of  50  miles  on  each  side.  Except 
where  special  or  "exception"  rates  are  in  effect,  the  "square"  rates  apply  to  all  points  to  which  the 
"state"  rates  are  not  lower. 

The  "square"  rates  were  originally  adopted  in  1869;  from  that  time  on,  such  rates  gradually 
replaced,  for  the  shorter  hauls,  the  almost  invariably  higher  rates  previously  in  effect.  Before  1880, 
possibly  at  as  early  a  date  as  1875,  "square"  rates  had  been  extended  over  the  whole  United  States — 
the  western  and  southern  schedule  being,  however,  higher  than  the  eastern  schedule. 

On  April  1,  1889,  a  rather  general  reduction  in  the  so-called  "state"  rates  was  introduced.  As 
a  result  of  this  change,  the  maximum  rates  between  points  lying  east  of  the  Mississippi  River,  west  of 
New  England,  and  north  of  the  Georgia,  Alabama,  and  Mississippi  line  (except  between  points  lying 
in  the  far  southern  portions  and  points  lying  in  the  far  northwestern  portions  of  the  territory  de- 
scribed) were  reduced  from  60  cents  to  50  cents.  At  the  same  time  the  maximum  rates  between  many 
of  the  western  states  were  reduced  by  about  2Qfo  to  25%. 

Between  1890  and  1895  the  western  and  southern  schedule  of  "square"  rates  was  replaced  by  the 
lower  eastern  schedule. 

From  the  comprehensive  reduction  of  April  1,  1889,  to  April  1,  1907,  some  dozens  of  sporadic 
reductions,  varying  on  the  whole  from  15%  to  35%,  were  made  in  the  maximum  "state"  rates  (includ- 
ing as  "state"  rates  the  rates  between  a  state  as  a  whole  and  an  individual  city  in  a  distant  state), 
while  a  number  of  37^%  reductions  in  the  maximum  rates  between  points  in  the  same  state  were 
effected. 

During  the  period  prior  to  1888,  a  large  number  of  special  rates  were  introduced,  the  majority 
of  them  affecting  traffic  between  important  centers.  About  1905  a  beginning  was  made  in  the  direction 
of  eliminating  such  special  rates;  and  on  April  1,  1907,  a  large  number  of  them  were  increased  to 
accord  with  the  appropriate  "square"  and  "state"  rates.  At  the  same  date  many  "state"  rates  were 
also  increased  by  10  or  15  cents. 

On  July  1,  1912,  a  very  sweeping  reduction  in  the  Western  Union  "square"  rates  was  made. 
Prior  to  this  date,  the  "square"  rate  from  any  office  to  any  other  office,  located  within  the  two  zones 
of  squares  adjoining  its  own  square,  was  25  cents  for  ten  words,  and  the  rate  to  the  next  following 
two  zones  of  squares  was  40  cents.  On  July  1,  1912,  the  rate  to  the  first  zone  of  40  cent  squares  was 
reduced  to  30  cents.  This  reduction  affected  the  rate  from  every  Western  Union  office  in  the  United 
States  to  every  other  Western  Union  office  located  within  the  third  zone  of  squares;  and,  in  the 
aggregate,  counting  tlie  rate  between  any  two  offices  affected  as  one  rate,  the  number  of  rates  reduced 
was  between  five  and  six  millions. 

*  OUTLINE  OF  THE  HISTORY  OF  ORDINARY    DOMESTIC     TELEGRAPH     RATES     IN 
THE  MORE  IMPORTANT  COUNTRIES  OF  WESTERN   EUROPE.'" 
Summary. 

The  history  of  the  domestic  telegraph  rates,  for  ordinary  service  in  the  more  important  countries 
of  Western  Europe,  shows  that  in  but  two  of  these  countries  (Sweden  and  The  Netherlands)  have 
these  rates  been  changed  since  October  1,  1894 — a  period  of  approximately  twenty  years.  In  Sweden 
the  change  (June  8,  1906)  consisted  of  merely  a  reduction  in  the  minimum  number  of  words  for  which 

*In  Europe  the  address  and  signature  of  a  telegraph  message  arc  subject  to  the   regular  rates  applicable   to 
the  text. 


80 

payment  is  required,  the  actual  rate  per  word  remaining  exactly  as  fixed  in  1889.  In  Tlie  Netherlands 
the  change  (July  1,  1898)  effected  a  reduction  only  in  the  rate  for  words  in  excess  of  ten,  and  thus 
did  not  in  any  way  affect  messages  of  ten  words  or  less,  which  constitute  about  one-half  of  the  do- 
mestic traffic;  and  the  rate  for  such  messages  is  still  the  same  as  in  1886. 

With  these  two  exceptions,  the  most  recent  rate  change  was  in  Denmark,  where  the  rate  for  the 
longer  hauls  was  substantially  increased  on  October  1,  1894. 

In  Germany,  the  real  ultimate  effect  of  the  rate  change  of  February  1.  1891,  was  the  elimination 
of  the  small  fixed  charge  per  message  (five  cents)  which  was  incorporated  in  the  rate  adopted  in  1876. 

In  Great  Britain,  a  general  reduction  in  rates  was  effected  on  October  1,  1885,  when  the  present 
rate  was  adopted. 

In  Belgium  and  in  France,  the  rate  has  stood  without  change  for  over  thirty  years,  the  present 
rates  being  introduced  in  1882  and  1878,  respectively. 

The  dates  when  the  present  rate  for  ordinary  domestic  service  went  into  effect  in  each  of  these 
countries  are  shown  below : 

France   May  1,  1878 

Belgium  January  1,    1882 

Great    Britain October  1,   1885 

Germany   February  1,  1891 

Denmark   October  1,   1894 

The  Xetherlands July  1,  1898 

Sweden    June  8,  1906 

Further  details  follow. 
Great  Britain. 

The  rates  of  the  private  telegraph  companies,  which  controlled  the  telegraph  business  of  the 
country  prior  to  1870,  varied — according  to  distance — from  1  shilling  (24  cents)  for  20  words,  to  2 
shillings  (48  cents)  for  20  words,  additional  charges  being  levied  where  a  message  passed  over  the 
lines  of  two  or  more  companies. 

In  1870,  however,  the  private  telegraph  systems  were  acquired  by  the  state,  which  immediately 
adopted  a  uniform  rate  of  1  shilling  (24  cents)  per  20  words,  with  3d.  (6  cents)  for  each  additional. 
5  words,  the  address  and  signature  being  free. 

On  October  1,  1885,  the  above  rate  was  replaced  by  a  rate  of  6d.  (12  cents)  for  12  words  and 
i^d.  (1  cent)  for  each  additional  word,  the  words  in  both  the  address  and  signature  being  charged 
for.     This  rate  has  remained  unchanged  to  the  present  date. 

Germany. 

On  March  1,  1876,  a  fixed  charge  of  20  Pfennig  (5  cents)  per  message,  plus  5  Pfennig  (1J4 
cents)  per  word,  was  introduced. 

On  July  1,  1886,  the  fixed  charge  per  message  of  20  Pfennig  (5  cents)  was  abolished,  and  a 
straight  charge  per  word  of  6  Pfennig  (lyi  cents)   was  substituted. 

On  February  1,  1891,  the  charge  per  word  was  reduced  to  5  Pfennig  (I'A  cents),  but  a  minimum 
of  50  Pfennig  (12  cents)  per  message  was  required.    This  is  the  present  rate. 

Sweden. 

April  1,  1865,  marked  the  adoption  of  a  rate  of  1  Krona  (26.8  cents)  for  20  words  and  25  0re 
(6.7  cents)   for  each  additional  5  words. 

On  January  1,  1889,  the  minimum  rate  was  reduced  to  50  0re  (13.4  cents)  for  10  words,  plus 
5  0re  (1.3  cents)  for  each  a.lditional  word  (instead  of  25  pre  for  each  addiliiMial  5  words). 

On  June  8,  1906,  the  minimum  rate  was  reduced  to  25  0re  (6.7  cents)  allowing  5  words.  The 
charge  of  5  0re  (13  cents)  for  each  additional  word  remained  unchanged— and  this  is  the  present 
rate. 

The  Netherlands. 

On  October  1,  1879,  a  tariff  was  adopted  providing  a  fixed  charge  per  message  of  15  Dutch 
cents  (6  U.  S.  cents),  plus   1   D.-tch  cent  (4/10  U.  S.  cent)  per  word. 


81 

On  July  7,  1886,  the  rate  was  changed  to  25  Dutch  cents  (10  U.  S.  cents)  for  10  words  and 
3  Dutch  cents  (1.2  U.  S.  cents)  for  each  additional  2  words. 

On  July  1,  1898,  the  present  rate  was  adopted,  namely:  25  Dutch  cents  (10  U.  S.  cents)  for 
10  words;  5  Dutch  cents  (2  U.  S.  cents)  for  each  additional  5  words  up  to  a  total  of  50  words;  5  Dutch 
cents  (2  U.  S.  cents)   for  each  additional  10  words  beyond  a  total  of  50  words. 

Denmark  (Long  Distance  Service). 

October  1,  1894,  the  rate  was  increased  from: 

50  0re  (13.4  cents)   for  20  words  and 
25  0re  (6.7  cents)   for  each  additional  10  words, 
to  the  present  rate  of : 

50  0re   (13.4  cents)    for  10  words  and 
5  0re  (1.3  cents)   for  each  adaitional  word. 

Belgium. 

No  change  has  been  made  in  the  rate  as  adopted  January  1,  1882.    This  rate  is: 

SO  centimes   (10  cents)    for  IS  words; 

10  centimes  (2  cents)   for  each  additional  5  words  up  to  a  total  of  50  words; 

10  centimes  (2  cents)   for  each  additional  10  words  beyond  a  total  of  50  words. 

France. 

Tlie  rate  which  went  into  effect  on  May  1,  1878,  stands  today.    This  rate  is: 

S  centimes  (1  cent)  per  word,  a  minimum  of 

50  centimes   (10  cents)   per  message  being  required. 

GOVERNMENT  INTERNATIONAL  TELEGRAPH  RATES  FOR  ORDINARY  SERVICE 

IN  IMPORTANT  EUROPEAN  COUNTRIES.  "' 

(The  countries  included  are  Austria,  Belgium,  Denmark,  France,  Germany,  Great  Britain,  The 
Netherlands,  Norway,  Sweden,  and  Switzerland.) 

Maximum  rates  for  ordinary  international  telegraph  traffic  were  established  by  a  general  in- 
ternational agreement  adopted  by  the  International  Telegraph  Conference  (held  in  St.  Petersburg)  as 
early  as  1875.  This  schedule  of  maximum  rates  has  been  more  or  less  revised  by  all  subsequent  In- 
ternational Conferences,  which  have  been  held  as  follows:  London  1879;  Berlin  1885;  Paris  1890; 
Budapest  1896;  London  1903;  and  Lisbon  1908.  The  Lisbon  (1908)  revision  is  in  effect  at  the 
present  time. 

These  general  international  agreements  established  maximum  rates  only ;  the  Conference  left 
the  individual  governments  free  to  fix  special  reduced  rates  through  special  individual  agreements, 
so  that,  as  a  mattter  of  fact,  in  practically  all  telegraph  traffic  between  adjacent  countries,  the  present 
rates  have  been  fixed  by  special  agreements,  and  are  lower  than  the  maximum  rates  established  by  the 
general   international  agreements. 

The  result  is  that — according  to  the  international  tariff  book  published  by  the  Office  of  the 
International  Telegraph  Union  in  1910,  supplemented  by  such  modifications  as  have  occurred  since 
that  date — of  the  45  separate  rates  at  present  in  effect  between  the  ten  countries  here  considered 
(counting  the  rate  between  any  two  countries  as  a  single  rate),  24  rates  still  correspond  to  the  maxi- 
mum rate  allowed  under  the  latest  revision  of  the  general  international  agreement,  while  21  rates 
(those  between  adjacent  countries)  are  rates  established  by  special  agreements. 

A  brief  outline  of  the  history  of  both  these  classes  of  rates,  based  on  the  publications  of  the 
Office  of  the  International  Telegraph   Union,   follows: 

A.  Rates  Corresponding  to  the  Maximum  Allowed  under  the  General  International  Agreement 
(Revision  of  1908). 
Prior  to  1885  the  international  rate  schedule  adopted  by  the  Conferences  was  based  upon  a 
fixed  charge  per  message  plus  an  additional  charge  for  each  word.  In  the  revision  of  1885,  however, 
the  fixed  charge  per  message  was  abolished,  and  all  rates  were  based  on  a  straight  word  charge.  As 
this  basis  has  been  retained  in  all  subsequent  revisions,  the  exact  effect  of  these  revisions  is  apparent 
from  a  comparison  of  the  various  revised  schedules. 


82 

First,  comparing  the  schedule  of  1885  with  the  revision  of  1903,  it  is  found  that  of  tlie  24 
rates  wliich  still  correspond  to  the  maximum,  11  had  been  reduced— by  an  average  of  about  one  cent 
a  word— by  the  end  of  the  period  of  eighteen  years;  whereas  13  rates,  or  over  one-half,  not  only  had 
not  been  reduced  prior  to  1903,  but  were  not  reduced  even  in  1903,  so  that  they  remained  without 
change  for  23  years   (1885-1908). 

The  revision  of  1908  effected  moderate  reductions  all  along  the  line,  all  but  three  of  the  24 
rates  being  decreased  by  about  one-half  a  cent  a  word  on  the  average.  A  comparison  of  the  1908  re- 
vision with  the  1885  schedule,  however,  shows  that  15  of  the  24  rates  have  been  reduced  by  less 
than  one  cent  a  word  between  1885  and  the  present  time — a  period  of  appro.ximately  30  years. 

B.     Rates  Fixed  by  Special  Agreement. 

As  has  already  been  stated,  21  of  the  present  rates  between  the  10  countries  under  considera- 
tion are  the  result  of  special  agreements.  Of  these  21  rates,  13  were  fixed  prior  to  1893,  or  over  20 
years  ago,  exactly  as  they  exist  today. 

Of  the  eight  special  rates  which  have  been  reduced  during  the  past  20  years,  three  were 
j-educed  in  1911  as  a  result  of  the  joint  acquisition  of  the  Great  Northern  Telegraph  Company's  Eng- 
land-Norway cables  by  the  governments  of  Great  Britain  and  Norway,  for.  coincident  with  this  trans- 
action (January  1,  1911),  the  rate  from  England  to  Norway  was  reduced  from  3d.  (6  cents)  per 
word,  to  2>2d.  (5  cents)  per  word ;  while  before  the  end  of  the  year,  similar  reductions  had  been  made 
in  the  rate  from  England  to  Sweden  and  to  Denmark  for  the  purpose  of  bringing  these  rates  into 
line  with  the  rate  to  Norway. 

The  changes  during  the  past  20  years  in  the  remaining  five  special  rates  have  been  as  follows : 

On  July  1,  1909,  the  rate  from  the  frontier  zone  of  Austria  to  Switzerland  was  reduced 
from  10  centimes  (2  cents)  per  word  to  9  centimes  (1.8  cents)  per  word. 

On  May  1,  1902,  the  rate  per  word  between  Norway  and  Sweden  was  reduced  from  10  0re 
(2.7  cents)  to  5  0re  (1.4  cents),  the  fixed  charge  per  message,  however,  remaining  unchanged. 

On  January  1,  1903,  the  rate  of  5  0re  (1.4  cents)  per  word  (in  addition  to  a  fixed  charge  per 
message)  between  the  coast  of  Denmark  and  the  coast  of  Sweden  was  extended  to  include  all  offices 
in  both  countries. 

On  January  1,  1903,  the  rate  per  word  between  Denmark  and  Norway  was  reduced  from  10 
Pre  (2.7  cents)  to  5  0re  (1.4  cents),  the  fixed  charge  per  message  remaining  unchanged. 

In  1901  the  rates  for  words  in  excess  of  50  in  messages  between  Bel.e^ium  and  The  Nether- 
lands was  reduced  from  5  centimes  (1  cent)  per  word  to  2>^  centimes  {'/2  cent)  per  word. 


83 


I 


APPENDIX  G— TABLE  I. 
OMPARISON  OF  ORDINARY  A\D  URGEXT  DOMESTIC  TOLL  RATES  IN  FOREIGN  COUNTRIES  WITH  TOLL  RATES 
IN  UNITED  STATES.     RATES  FOR  10  MILES  ARE  IN  ALL  CASES  FOR  "TWO-NUMBER"  SERVICE;   FOR 
ALL  OTHER  DISTANCES  THEY  ARE  FOR  "PARTICULAR  PERSON"  SERVICE. 

RATES  IN  CENTS. 


10  Miles. 


Minutes. 


Sweden 

Ordinary   

Urgent  

Norway 

Ordinary   

Urgent   

Denmark 

Ordinary   .... 

Urgent  

Germany 

Ordinary  

Urgent  

Austria 

Ordinary   

Urgent 

France*   

Belgium!  

Great  Britainf  .... 
New  Zealand!  .... 
United  States§    ... 
Mean  of  Foreign 
Countries 

Ordinaryt 

UrgentJ 

%  Mean  Foreign 
Rates  to 
United  States 
Rates 

Ordinary    '    142 

Urgent    I  240 


4.0 
8.0 

4.0 
12.0 

6.7 
13.4 

4.7 
14.3 

8.1 
24.3 
4.8 
19.3 
6.0 
6.0 
5.0 


7.1 
2.0 


8.0 
16.1 

8.0 
24.0 

13.4 
26.8 

9.5 
28.6 

16.2 

48.6 

9.6 

19.3 

12.0 

8.0 

5.0 


11.5 
21.4 


230 
428 


8.0 
16.1 

8.0 

24.0 

13.4 
26.8 

9.5 
28.6 

16.2 
48.6 

9.6 
19.3 
12.0 
10.0 

5.0 


11.8 
21.6 


236 
432 


25  Miles. 


Minutes. 


10.7 
14.7 

8.0 
21.4 

13.4 
20.1 

12.0 
23.8 

18.3 
42.7 
10.8 
24.1 
9.0 
9.0 
15.0 


12.8 
19.5 


85 
130 


14.7 
22.8 

14.7 
41.5 

20.1 
33.5 

17.9 
41.7 

30.5 
79.3 
18.0 
24.1 
15.0 
11.0 
20.0 


18.3 
31.9 


92 
160 


SO  Miles. 


Minutes. 


14.7  10.7 

22.8  14.7 


14.7 
41.5 

20.1 
33.5 

17.9 
41.7 

30.5 
79.3 
18.0 
24.1 
15.0 
13.0 
25.0 


18.7 
32.1 


75 
128 


14.7 
22.8 


12.0     21.4 
30.8     58.9 


16.1 
25.4 

17.9 
41.7 

26.4 
67.0 
10.8 
24.1 
16.2 
16.2 
30.0 


16.6 
27.4 


SS 
91 


25.4 
44.2 

29.7 

n.z 

46.7 
127.9 
18.0 
24.1 
28.2 
20.2 
40.0 


14.7 
22.8 

21.4 
58.9 

25.4 
44.2 

29.7 

n.z 

46.7 
127.9 
18.0 
24.1 
28.2 
24.2 
50.0 


100  Miles. 


Minutes. 


25.4  I  25.8 
46.8     47.3 


64 
117 


52 
95 


14.7 
22.8 

25.5 
65.7 

26.8 
46.9 

29.7 
77.3 

46.7 
127.9 
18.1 
24.1 
30.0 
30.0 
60.0 


27.3 
49.2 


46 
82 


22.8 
38.8 

45.6 
126.0 

46.9 
87.1 

53.5 
148.7 

87.3 
249.9 
32.6 
24.1 
54.0 
38.0 
80.0 


44.9 


56 
111 


22.8 
38.8 

45.6 
126.0 

46.9 
87.1 

53.5 
148.7 

87.3 
249.9 
32.6 
24.1 
54.0 
46.0 
100.0 


45.8 
89.5 


46 
90 


200  Miles. 


Minutes. 


20.1 
33.5 

32.2 
85.8 

46.9 
87.1 

29.7 
77.3 

67.0 

188.8 
30.1 

75.6 
60.0 
120.0 


45.1 
79.7 


38 
66 


33.5 
60.3 

59.0 
1662 

87.1 
167.5 

53.5 
148.7 

127.9 

371.5 
54.2 

135.6 
76.0 
160.0 


78.3 
147.4 


49 
92 


500  Miles. 


Minutes. 


33.5     33.5     60.3 
60.3     60.3    113.9 


59.0 
1662 

87.1 
167.5 

53.S 
148.7 


41.6!   77.3 
113.0 1 220.1 


60.3 
113.9 


77.3 
220.1 


127.9     87.3  1 168.5    168.5 

371.5   249.7  !  493.3    493.3 

54.2     66.0    119.0    119.0 


135.0    181.0 

92.0  I      .. 

200.0   300.0 


80.3 
149.4 


40 

75 


81.9 
134.0 


27 
45 


326.0 
400.6 


150.2 
254.5 


38 
64 


326.0 
500.0 


150.2 
254.5 


30 

51 


♦These  arc  the  minimum  rates  for  these  distances.     In  many  cases  higher  rates  are  in  eflfect.    No  "particular  person"  service  is  given, 
or  which  reason  50%  of  initial  rate  is  added  at  25  and  50  miles,  and  25%  is  added  for  other  distances. 

J  Increased  25%  for  distances  of  25  miles  or  more  to  make  comparable  with  "particular  person"  rates. 

tincreased  50%  at.  25  miles,  35%  at  50  miles  and  25%  for  greater  distance    to  make  comparable  with  "particular  person"  service. 

§These  rates  are  figured  on  the  basis  of  6  mills  per  mile  to  the  nearest  higher    multiple    of   5   cents,    except    for    10   miles,   when   the 
egular  "two-number"  rate  is  given.    6  mills  per  mile  is  used  by  Mr.  Lewis,  and  is  a  fair  average  rate  for  the  United  States. 

tin  obtaining  the  mean  ordinary  and  urgent  rates,  the  rates  in  France,  Great    Britain,    Belgium,  and    New   Zealand   were   considered 
oth  as  ordinary  and  as  urgent. 


84 


APPENDIX  G— TABLE  IT. 

SHOWING  FOREIGN'  DOMESTIC  TOLL  RATES  IN  COMTAKISON    WITH    AMERICAN    TOLL    RATES. 
THIS  TABLE  DIFFERS  FROM  TABLE  I.  PRECEDING.  ONLY  IN  THAT  THE  RATES  HAVE  UEEN  EQUATED  ON  THE  BASl 
OF  THE  VALUE  OF  MONEY  AS  SHOWN  BY  WAGES  FOR  SWITCHBOARD  OPERATORS  AFTER  3  YEARS" 

SERVICE.     (SEE  APPENDIX  E.) 
RATES  IN  CENTS. 


10  Miles. 

25  Miles. 

50  Miles. 

100  Miles.        1        200  Miles. 

500  Miles. 

Minutes. 

Minutes. 

Minutes. 

Minutes. 

Minutes. 

Minutes. 

3 

4 

5 

3 

4 

5 

3 

4 

5 

3 

4 

S 

3 

4 

5 

3 

4 

S 

Sweden 

Ordinary  

10.0 

20.0 

20,0 

26.8 

36.R 

36A 

26.8 

36.8 

36.8 

36.8 

57.0 

57.0 

50.3 

83.8 

83.8 

83.8 

151.0 

ISl 

Urgent 

20.0 
10.0 

40.3 
20.0 

40.3 
20.0 

36.8 
200 

57.0 
36.8 

57.0 
36.8 

36.8 
30.0 

57.0 

53.5 

57.0 
53.5 

57.0 

63.8 

97.0 
114.0 

97.0 
114.0 

83.8 

80.5 

151.0 

147.5 

151.0 

147.5 

151.0 

284.8 

284 

Norway 

Ordinary   

Urgent              . .  • 

30.0 

60.0 

60.0 

53.5 

104.0 

IW.O 

77.0 

147.3 

147J 

164.3 

315.0 

315.0 

214.5 

415.5 

415.5 

•• 

Denmark 

Ordinary   

19.7 

39.4 

39,4 

.^9  4 

592 

59.2 

47.4 

74.7 

74.7 

78.8 

138.0 

138.0 

138.0 

256.0 

256.0 

LVgent                  • 

39.4 
102 

78.8 
20.7 

78.8 
70  7 

59.2 
761 

98.5 
38.9 

98.5 
38.9 

74.7 
38.9 

130.0 
64.6 

130.0 
64.6 

138.0 
64.6 

256.2 
116.3 

256.2 
116.3 

256.0 
64.6 

492.7 
116.3 

492.7 
116.3 

90.4 

168.0 

Germany 

Ordinary    

168 

Urgent   

31.1 

24..=; 

62.2 
490 

62.2 
49  0 

51.7 

55.5 

90.7 
92.4 

90.7 
92.4 

90.7 
80.0 

168.0 
141.5 

168.0 
141.5 

168.0 
141.5 

323.3 
264.6 

323.3 
264.6 

168.0 
203.0 

323.3 
387.6 

323.3 

245.7 

478.5 
510.6 

478 

Austria 

Ordinar)-   

387.6 !  264.6 

510 

Urgent   

73..S 

147.0 

147.0 

129.4 

240.3 

240.3 

203.0  1  387.6 

387.6 

387.6 

757.6 

757.0 

572.1 

1125.8 

1125.8  757.6 

1495.0 

1495 

10.7 
S6.7 
10.9 

21.4 
56.7 
21.8 

21.4 
56.7 
21.8 

24.0 
70.9 
16.4 

40.0 
70.9 
27.3 

40.0 
70.9 
27.3 

24.0 
70.9 
29.5 

40.0 
70.9 
51.4 

40.0 
70.9 
51.4 

40.2 
70.9 
54.5 

72.4 
70.9 
98.2 

72.4 
70.9 
98.2 

67.0 
136.4 

120.4 
245.5 

120.4 
245.5 

146.7 
329.6 

264.4 
592.7 

26^ 

Belgium  

Great  Britain 

592 

.\\"\v   Zealand* 

United  States    

.5.0 

5.0 

5.0 

15.0 

20.0 

25.0 

30.0 

40.0 

50.0 

60.0 

80.0 

100.0 

120.0 

160.0 

20O.O 

300.U 

400.0 

MX) 

Mean  of  Foreign 

Rates 

Ordinar>-  

191 

31  1 

31.1 

34.9 

50.3 

50.3 

43.4 

66.7 

66.7 

68.9 

116.4 

116.4 

105.7 

193.9 

193.9 

182.9 

337.3 

337 

Urgent   

34.0 

61.0 

61.0 

55.2 

91.1 

91.1 

75.8 '  131.5 

131.5 

135.1 

248.8 

248.8 

214.0 

410.6 

410.6 

326.0 

623.1 

62J 

%  Mean 

Foreign  Rates 

1            to  United 

1             States   Rates 

'                 Ordinary 

3f« 

6?? 

622 

233 

251 

201 

145 

167 

133 

115 

146 

116 

88 

121 

97 

61 

84 

Urgent 

680 

1240 

1220 

368 

455 

364 

252 

329 

263 

225 

311 

249 

178 

256 

205 

109 

156 

1 

•No  information. 


85 


APPENDIX     H. 
LIST  OF  REFERENCES  AND  AUTHORITIES 

'Annual  Report  of  the  Secretary  of  the  Treasury  on  the  Finances,  December  2,  1912,  page  32.  The  items  given 
are: 

POST  OFFICE  DEPARTMENT: 

Salaries  and  Expenses $1,597,691.58 

Defijcicncy  in   Postal   Revenues 1,568,194.88 

Establishing  Postal  Savings  Depositories 287,553.80 

Miscellaneous  Items 7,791.62 

Total— Post  Office  Department $3,461,231.88 

The  amount  quoted  in  the  text  was  obtained  by  deducting  the  amount  "Deficiency  in  Postal  Revenues"  from 
the  Total. 

'Public  Laws  of  the  United  States  of  America  passed  by  the  Sixty-second  Congress  1911-1913;  Washington  1913. 
Session  III,  Chapter  142,  1913.    Appropriations  used  derived  from  pp.  778,  799,  780,  781,  754,  755. 

'Chapter  143,  Session  III,  Sixty-second  Congress;  approved  March  4,  1913.  The  items  of  appropriation  check 
with  the  detailed  list  of  items  of  expense  given  in  the  Report  of  the  Post  Office  Department  for  1912,  pp. 
344-346. 

*  Annual  Report  of  the  Supervising  Architect  for  the  fiscal  year  ended  June  30,  1912,  page  281. 

'Annual  Report  of  the  Supervising  Architect,  1912.  The  statistics  given  are  obtained  by  combining,  for  each  class  of 
building,  the  detailed  expenditures  given  on  pages  204  to  217. 

'Annual  Report  of  the  Supervising  Arcliitect,  1912,  page  5. 

'  Annual  Report  of  the  Postmaster  General,  1913,  page  21. 

'  Annual  Report  of  the  Postmaster  General,  1913,  page  45. 

'Annual  Report  of  the  Postmaster  General,  Great  Britain,  1912-13,  page  92. 

"Annual  Report  of  the  Postmaster  General,  Great  Britain,  1912-13,  page  41. 

"  Annual  Report  of  the  Postmaster  General,  1913,  page  22. 

"  Annual  Report  of  the  Postmaster  General,  1913,  pp.  21-24.', 

"  Congressional  Record,  Vol.  41,  p.  3,146. 

"Speech  of  Representative  Hanger,  April  29,   1912;   reported  in  Congressional  Record,  Vol.  48.  p.  5.069. 

"  Mr.  Julier,  before  the  VValcott  Commission.     Reported  in  Congressional  Record,  Vol.  41,  p.  3,150, 

"Congressional  Record,  January  17,  1914,  p.  1,748. 

"  Letter  of  Justinian  Oxenham,  Esq.,  Secretary  of  the  Postmaster  General's  Department,  of  Australia,  dated  No- 
vember 17,  1913,  transmitting  to  the  Postmaster  General  a  report  of  tlie  Cliief  Accountant.  Postmaster- 
General's  Department.  Balance  Sheet  on  30th  June,  1913,  and  l'"inancial  Statements  Slewing  the  Working 
Results  of  the  Various  Branches  for  the  Year  1912-13,  Together  with  Covering  Reports  by  the  Secretary 
and  the  Chief  Accountant.    The  Parliament  of  the  Commonwealth  of  Australia,  1913. 

"Letter  from  General   Post  Office,  London,  dated  March  28,   1913. 

"Translation.  Grand-Duche  de  Luxembourg.  Administration  dcs  Postes,  Tclcgraphcs  et  Telephones.  Renseigne- 
ments   Statistiques  pour  les  Annees    1911    et    1912.     Luxembourg,  1913.     Page  2,  foot-note. 

"  Congressional  Record,  Vol.  51,  page  2,124. 

"  Report  of  First  Assistant  Postmaster  General  for  1913,  page  21 ;  49,614  post  offices  of  the  fourth  class. 

"Report  of  the  Postmaster  General  (Great  Britain)  on  the  Post  Office,  1912-1913.    Page  62. 

""Congressional  Record,  Vol.  51,  page  1,418]  next  to  last  paragraph. 

'*  Information  Supplied  by  the  Secretary  to  the  Post  Office.  1912  (to  the  Select  Committee  on  Post  Office  Servants), 
pp.  9  and  10. 

"  Rapport  Prcsentc  aux  Chambres  Legislatives  par  M.  le  Ministrc  des  Chemins  de  Fer,  Postes  et  Telegraphes.  (For 
the  year  1911.)     Partie  C.  Bruxelles   1912.     Page  22. 

"Journal  Telegraphiquc,   Vol.  XXXVI,   No.   11,   November  25,  1912,  page  283.    Note  9,  Relgique. 

"Letter  of  A.  Hamilton,  Directcur  de  la  Division  Administrative  de  la  Direction  Generale  dcs  Telegraphes  de 
Suede,    dated    Stockholm,    February    18,    1913. 

"Journal   Telegraphiquc,  V.,1.   XXXVI,   No.    11,   November  25,  1912,  page  282. 

"  Idem,  page  282,  and  notes  4  and  5,  page  286. 

"Journal   Telegraphiquc,  Vol.  XXXV,   No.   11,   November  25,  1911,  p.  266;  and  note  6  under  Suisse,  p.  270. 

"Journal    Telegraphiquc,   Vol.   XXXV,    No.    11,    November  25,  1911,  p.  262;  and  notes  7  and  8,  Bclgiquc,  p.  267. 

"Journal   Telcgraphique,   Vol.   XXXV,   No.   11,    November  25,  1911,  p.  266;  and  notes  5  and  6,  Pays-Bas,  p.  270. 

"Journal   Telegraphiquc,  Vol.  XXXVI,   No.  4,  April  25,  1912,  p.  78;  and  note  5,  Suede,  p.  80. 

"Journal  Telcgraphique,  Vol.   XXXV,   No.   11,   November  25,  1911,  p.  266. 

"^  .Annual  Report  of  the  Post  and  Telegraph  Department  for  the  Year  1910,  New  Zealand,  p.  11. 

"Annual  Report  of  the  Post  and  Telegraph  Department  for  the  Year  1912,  New  Zealand,  p.  11. 


86 

"Journal  Telegraphique.  Vol.  XXXV,  No.  11,  November  23,  1911,  p.  266. 

No.  of  OlVicts  with  Permanent  Service 0.0 

No.  of  OtTices  » ith  Full  or  Extended  Day  Service  1  857 

No.  of  Offices  with  Limited  Day  Service '  % 

Total 1,963 

This  information  is  the  latest  available,  January  27,  1914. 
"Journal  Telegraphique,  Vol.  XXXVII,  No.  5,  May  25,  1913,  p.  107. 

No.  of  Offices  with  Permanent  Service 5 

No.  of  Offices  with  Full  or  E.xtended  Day  Service  165 

No.  of  Offices  with  Limited  Day  Service 1_S0S 

Total  1_67S 

"Journal  Telegraphique,  Vol.  XXXVII,  No.  11,  November  25,  1913,  p.  254. 

No.  of  Offices  with  Permanent  Service 17 

No.  of  Offices  with  Full  or  Extended  Day  Service  437 

No.  of  Offices  with  Limited  Day  Service 1,225 

Total 1,679 

"Journal  Telegraphique,  Vol.  XXXVII,  No.  11,  November  25,  1913,  p.  258. 

Sweden. 

No.  of  Offices  with  Permanent  Service 46 

No.  of  Offices  w  iih  Full  or  Extended  Day  Service  1,252 

No.  of  Offices  with  Limited  Day  Service L615 

Total 2,913 

The  Netherlands. 

No.  of  Offices  with  Permanent  Service H 

No.  of  Offices  with  Full  or  Extended  Day  Service  250 

No.  of  Offices  with  Limited  Day  Service ." 1,216 

Total 1,477 

Switzerland. 

\o.  of  Offices  with  Permanent  Service 6 

No.  of  Offices  with  Full  or  Extended  Day  Service  460 

No.  of  Offices  with  Limited  Day  Service 1,908 

Total 2,374 

"Bericht  der  eidgenoessischen  Telegraphen-und  Telephonverwaltung  ueber  ihre  Geschaeftsfuehrung  im  Jahre  1912. 

(Switzerland)  p.  17. 
"Post-und   Tclegraphen-Nachrichten    fucr  das   Publikum,   (Germany)  July,  1913,  p.  31.     British  Post  Office  Guide, 

January  1,  1914,  p.  87.     Tclegraphen-Tarif,   (Austria,  Official)  July  15,  1911,  p.  8.    Annuairc  de  I'Administra- 

tion  des  Postes  et  des  Telegraphes  de  France,  pour  1907,  p.  115. 
"Special  Report  by  E.  Y.  Gallaher,  General  Auditor,  Western  Union  Telegraph  Company,  January  29,   1912.     Not 

published. 
"Post  Office  Department,  Annual  Reports,  1912,  p.  112. 
"  Report  of  First  Assistant  Postmaster  General  for  1913,  p.  21. 

"Act  of  July  12,  1876.    Quoted  in  Senate  Report  201,  Sixtieth  Congress,  First  Session,  1908,  p.  232. 
"Tarif   Telegraphique   Etabli    le   ler    Mai    1911.      Published  telegraph  tariff  sheet  of  the  Luxemburg  Administration. 
"Telcgrafreglemente,   1909,   Svcnsk   Forfattnings-Samling,  1909.     No.  52,  p.  7. 
"  Relazione  interno  ai  Servizi   Postali,  Telegrafici,  e  Telefonici  per  I'Esercizio  1909-1910,  p.  LXI. 
"Royaume   de   Belgiquc.     Tarif   Telegraphique,   ler  Juillet  1909.  p.  6. 
"Netherlands:     Volledig  Tarief  voor  Telcgrammen,  1  Maart  1911,  p.  15. 

"  Determined  by  the  Western  Union  Telegraph  Company  in  January,  1914,  by  counting  the  actual  words  not 
charged  for  in  2,623  telegrams  from  New  York  City.  Actual  average  by  American  count,  11.48  words. 
The  telegrams  were  selected,  in  about  equal  numbers,  with  reference  to  those  going  to  large  cities  and 
those  going  to  smaller  cities  and  towns.  The  European  count  was  applied  to  more  than  120  of  these  tele- 
grams to  determine  the  average  difference  between  the  two  counts.  For  telegrams  addressed  to  large  cities, 
the  European  count  is  shorter  by  not  more  than  1.5  words ;  and  for  those  addressed  to  the  smaller  towns, 
is  shorter  by  less  than  .5  words.  The  difference  is  due  almost  entirely  to  the  difference  in  methods  of 
counting  numbers  of  more  than  one  digit. 

"  (British)  Post  Office  Guide,  No.  231,  p.  89. 

"  Post-und   Tclegraphen-Nachrichten    fuer  das    Publikum.      (Germany)  July,  1913,  p.  31. 
"Annuaire  de  I'Administration  des  Postes  et  des  Telegraphes  de  France,  pour  1907,  p.  110. 
" Telegraphen  Tarif  (Austria,  Official),  July  IS,  1911,  p.  4. 

"Reglement  de  Service  International  annexe  a  la  Convention  Telegraphique  Internationale  de  St.  Petcrsbourg. 
Revision  de  Lisbonne  1908.  Articles  XIX  and  XX.  This  covers  international  service  only,  but  the  practice 
is  general.  (See  references  ",  **,  "  and  **  above.)  Usually  no  mention  is  made  of  the  signature  and  a 
signature  is  not  required. 


8; 

"For  example,  in  Great  Britain.     (See  British  Post  Office  Guide,  No.  231,  p.  94.) 
'' Annuaire   dc   rAdniinistration   des   Postes   et   des  Telegraphes  de  France,  pour  1907,  pp.  115  and  117. 
"  Reglement    for   den    Indenlandske   Telegramveksling,    Kristiania,  1911,  pp.  13  and  21. 

"  Hoofdbestuur  der  Posterijen  en  Telegrafie.     (The  Netherlands)  Volledig  Tarief  voor  Telegrammen,  pp.  11  and  15. 
"Telegrafreglemente,    1909.     Svensk   Forfattnings-Samling,  1909,  No.  52,  pp.  7  and  17. 
"  British  Post  Office  Guide,  No.  231,  p.  86. 

•*  Post-und  Telegraphen-Nachrichten  fuer  das  Publikum.     (Germany)  July,  1913,  pp.  30  and  32. 
"Telegraphentarif.    Vienna,  1911,  pp.  11  and  27. 
"  New  Zealand   Post  and   Telegraph  Guide,  February,   1912,  p.  286.^ 

"  Telegraphen-und  Telephon-Handbuch  fuer  die  Schweiz,  1897,  p.  25.  No  change  has  been  made  in  Swiss  telegraph 
rates  in  recent  years,  although  it  is  understood  that  they  are  now  being  revised. 

"  Telegramtakst  for  Danmark,  July  1909,  pp.  1  and  5. 

"Journal  Telegraphiquc,  Vol.  XXXVII,  No.  11,  November  25,  1913,  pp.  254  and  258  (Belgium,  traffic  and  revenue 
from  "expres  postaux"  excluded). 

"Journal  Telegraphiquc,  Vol.  XXXVI,  No.  11,  November  25,  1912,  p.  281  and  notes  thereto.  Mr.  Lewis'  figure  is 
in  error,  largely  due  to  the  inclusion  of  10,324.821  pneumatic  messages,  and  the  corresponding  revenue  of 
4,607,482  francs.  These  partake  of  the  nature  of  local  mail  messages  and  not  of  electrically  transmitted 
telegrams. 

"Journal  Telegraphiquc,  Vol.  XXXVII,  No.  5,  May  25,  1913,  p.  107.  Revenue  does  not  include  miscellaneous 
receipts   (except  for  Russia). 

"  Sveriges  Officiella  Statistik.  Telcfon  och  Telegraf  ar  1912  av  Kungl.  Telegrafstyrelsen,  Stockholm,  1913,  pp.  10, 
13  and  14. 

"Report  of  the  Postmaster-General  on  the  Post  Office,  1912-1913  (Great  Britain),  pp.  15  and  34. 

"Journal  Telegraphiquc,  Vol.  XXXVII,  No.  11,  November  23,  1913,  p.  257.  The  traffic  includes  messages  from 
railroad   stations,   but   the   revenue   does   not   include  the  receipts  from  such  messages. 

"  .Statistik  des   Oesterreichischen   Post-und   Telegraphenwcsens  ini  Jahre  1912,  Vienna,  1913,  pp.  6  and  8. 
■°  Schweizerische  Post-Telegraphen-und  Telephon-Statistik  1912,  pp.  58,  68  and  69. 

"Journal  Telegraphiquc,  Vol.  XXXVII,  No.  11,  November  25,  1913,  p.  257.    Revenue  does  not  include  miscellaneous 

receipts. 
"Telegraphentarif,  Vienna,  1911. 

"  Koyaume  de  Belgique.     Administration  des  Telegraphes.    Tarif  Telegraphiquc,  July  1,  1909. 
""Decomposition  des  Taxes  du  Tableau  A,  Annexe  au  Reglement  du  Service  Telegraphiquc  International  (Revision 

de  Lisbonne).     Bureau  International  de  I'Union  Telegraphiquc,  Berne,  J910. 

"Post-und    Telegraphen-Nachrichten    fuer    das    Publikum  (Germany),  July,  1913,  p.  30. 
"'  British  Post  Office  Guide,  No.  231,  pp.  871  and  872. 

"  The  facts  concerning  the  duplication  in  counting  international  messages  are  apparent  from  the  "Journal  Tele- 
graphiquc" statistics  and  tlie  annual  reports  of  the  various  administrations.  Commercial  telegraph  traffic 
is  usually  divided  into  the  following  classes :  (1)  internal;  (2)  international  received;  (3)  international 
sent;  and  (4)  international  transit.  The  facts  concerning  the  division  of  receipts  from  all  European  inter- 
national commercial  telegrams  are  given  in  "Decomposition  des  Taxes  du  Tableau  A  Annexe  au  Regle- 
ment du  Service  Telegraphiquc  International  (Revision  de  Lisbonne),  Berne,  Bureau  International  de 
rUnion  Telegraphiquc,  1910." 

"  Statstelegrafvaesenet.    Telegramtakst  for  Danmark,  July  1909. 

"Volledig   Tarief    voor    Telegrammen,    1911. 

'* Telcgraphcn  Tarif   (Official  Tariff  Sheet),   September,  1911. 

"  Statistical  Abstract  of  the  United  States,  1912,  p.  22.    Does  not  include  Alaska,  Canal  Zone,  or  Island  Possessions. 

"Areas  for  foreign  countries  are  taken  from  Official  Year  Book  of  the  Commonwealth  of  Australia,  1913,  p.  48, 
and  have  been  checked  with  those  given  in  Geographisch-Statistische  Tabellen  AUer  Lacnder  der  Erde, 
compiled  by  Dr.  Franz  von  Juraschek,  1913. 

**  Map  measurements  from   Rand-NcNally  Indexed  Atlas  of   the   World,   Vol.   II.,   Foreign   Countries,    1908.     The 

maximum  air  line  distances  are  taken  from  the  texts  associated  with  the  maps,  when  stated. 
"  Western  Union  Telegraph  Company.     The  averages  are  made  up  as  follows : 

Average  Length  of  Haul  for  Various  Classes  of  IVeslern  Union  Messages. 

Do>  messages   496  miles 

Day  letters   797      " 

Night   messages    797      " 

Night  letters    1,025      " 

Day   press   messages 432      " 

Night    press    messages 485 

Average  of  all  messages 573 

38,564  messages  originating  at  New  York,  Chicago,  and  San  Francisco  were  analyzed  to  obtain  these  statistics. 

"  Letter  of  Director  General  of  Telegraphs  of  Belgium,  dated  November  30,  1912 :  "The  average  haul  has  been  estab- 
lished only   in  the  case  of  private    (commercial)  domestic  telegrams.    It  is  68.481  kilometers  (42.5  miles)." 
(Translation.) 
"Journal  Telegraphiquc,  Vol.  XXXVII,  No.  11,  November  25,  1913,  p.  254.     (Derived.) 

"Special  study  of  Western  Union  Telegraph  Company's  traffic  from  Amsterdam,  Cohoes,  Fort  Edward,  Glens  Falls, 
Hudson,  Hudson  Falls,  Kingston,  Newburgh,  Saugcrties,  Schenectady,  and  Troy  for  the  month  of  August, 
1912. 


88 

"The  mean  of  the  distances  as  scaled  from  Rand-McXally  maps,  between  Birmingham.  Belfast.  Bradford.  Bris- 
l°i'  P'.'?''"'  Edinburgh.  Glasgow.  Hull.  Leeds.  Liverpool,  London.  Nottingham.  Manchester.  Newcastle,  and 
bnettiela. 

"The  mean  of  the  distances,  as  scaled  from  Rand-McXnlly  maps.  bcMveen  Amsterdam.  Antwerp.  Barcclonn  Bel- 
fast. Berlm,  Birmmgham,  Blackburn,  Bolton,  Bradford.  Breslau.  Bristol.  Brussels.  Budapest  Charlottcn- 
burg  Cologtie.  Copenhagen.  Dresden,  Dublin.  Dusscldorf,  Edinburgh,  Frankfort,  GlasRow.  Hamburg  Mull. 
Leeds.  Leipzig.  Lisbon.  Liverpool.  London.  Lyons.  Madrid,  ^ranchester.  Marseilles,  Milan  Munich  Naples 
Newcastle,  Nottingham,  Nuremburg,  Palermo,  Paris,  Rome,  Rotterdam,  Sheffield.  Stockholm.  Turin  and 
Vienna.  ' 

"The  Parliament  of  the  Commonwealth  of  Australia.  Postmaster  General's  Department.  Second  Annual  Report, 
1911-lJ,  p.  17.     No  international  messages  or  revenue  are  included. 

"  Report  of  an  Enquiry  by  the  Board  of  Trade  into  Working  Class  Rents,  Housing,  and  Retail  Prices,  together 
with  the  Rates  of  Wages  in  certain  occupations  in  the  Principal  Industrial  Towns  of  the  United  States 
of  America.    London,  1911,  p.  LXXVL 

"  Statistik  des  Oesterreichischen  Post-und  Telegraphenwescns  im  Jahre  1912,  Wien,  1913.  p.  8. 

"Statistik  Oversigt  over  det  danske  Tclegrafvacsens  Virksomhcd  i  Finansaarct  1912-1913.  p.  61.  The  items  of 
expense  included  were  from  a  letter  from  the  Telegraph  Directorate. 

•"France.  Xo.  189  Senat.  Annee  1911.  Session  Ordinaire.  Rapport  Fait  au  Nom  de  la  Commission  des  Finances 
Chargee  d'examiner  le  projet  de  loi  adopte  par  la  Chambre  des  Deputes,  porlant  fixation  du  budget  general 
de  I'exercice   1911.     Par   M.   Emile  Dupont,  Senateur,   Paris,   1911,  p.   117. 

"France.  Xo.  2094  Chambre  des  Deputes.  Session  Extraordinaire  de  1904.  Rapport  Supplementaire  fait  au  nom 
de  la  Commission  du  Budget  chargee  d'examiner  le  projet  de  loi  portant  fixation  du  budget  general  de 
I'exercice  1905.  (Service  des  Postes.  Telegraphes.  et  Telephones.)  Par  ^r.  Marcel  Sembat.  Depute.  Paris 
1904.  p.  128. 

""Archiv  fuer  Post  und  Telegraphic,  April.  1901.  p.  193. 

"•Beilage  der  Deutschen  Verkehrs-Zeitung.  April  5.  1912.     Stenographische  Berichte  des  Reichstags,  p.  170. 

■*  Verkehrsministerialblatt   fuer  das  Koenigreich  Bayern,  Xo.  2.  1908.  pp.  IS  and  16. 

""Die  Grundlagen  der  Preisbildung  im  Elektrischen  Nachrichtenverkehr,  von  Dr.  Hans  Schwaighofer  Muenchen 
1902,  p.  74. 

""The  Post  Office.  .■\n  Historical  Summary.  Published  by  order  of  the  Postmaster  General,  June.  1911.  pp.  11 
and  78. 

""First,  Second,  and  Third  Reports  from  the  Committee  of  Public  Accounts,  together  with  the  Proceedings  of 
the  Committee,  Minutes  of  Evidence,  and  Appendices.     London,   1910,  p.   179. 

"•Report  of  the   Postmaster  General  on  the   Post   Office,  1912-13.  p.  34. 

""Verslag  aan  de  Koningin  betrekkelijk  den  dienst  der  Posterijen,  der  Telegrafie,  en  der  Telefonie  in  Nederland 
1912,  p.  164. 

"Message  du  conseil  federal  a  I'assemblee  federale  concemant  le  relcvement  des  taxes  telephoniques  (du  20 
Decembre  1909),  p.  19. 

""  Ergaenzender  Bericht  des  Bundesrates  an  die  nationalraetliche  Kommission  Zur  'Vorlage  Betreffend  die  Erhoehung 
der  Telcphongebuehren.     (Vom  21  Maerz  1911.)     Tabellen  1,  2. 

"•Report  of  the  Royal  Commission  on  Postal  Services,  September  30,  1910.     (.\ustralia.) 
"'Prepared  from  information  furnished  by  the  Western  Union  Telegraph  Company. 
•"The   history   of    foreign   telegraph    rates   has  been   prepared  from  the  following  sources: 

Journal  Telegraphique,  1878-1913. 

Annual  Reports  of  the  Postmaster  General  on  the  Post  Office  (Great  Britain). 
The   Post  Office.     An  Historical   Summary.     (Great  Britain.) 
SO  Jahre  elektrischer  Telcgraphie.  Berlin  1899.     (Germany.) 
Annual  Reports  of  the  Swedish  Telegraph  Administration. 

Svenska  Telegraf  Vcrket-Minnesskrift  utgifven  af  Kungl.     Telegrafstyrelsen.  Stockholm  1903.     (Sweden.) 
De  Rijkstelegraaf  in   Nederland    1,852-1902.   Amsterdam  1902.     (The  Netherlands.) 
Annual  Reports  of  the  Danish  Telegraph  Administration. 
Annual  Reports  of  the  Belgian  Telegraph  Administration. 

Annuaire  de  I'Administration  des   Postes  et  des  Telegraphes  de  France  pour  1907.     (France.) 
Tableaux  de  Tarifs  Internationaux  etablis  en  execution  de  I'article  IS  de  la  convention  et  des  articles  XXII 
a  XXI'V  du  Rcglement. 

"•Journal  Telegraphique,  Vol.  XXXVT,  No.  11.  November  25.  1912.  p.  281.  Mr.  I^wis  apparently  used  the  fipure 
65.518.497  as  the  number  of  telegrams,  and  39,252.245  as  the  population.  These  give  a  per  capita  figure 
of  1.67.    Included  in  the  total  telegrams,  however,  are  10,324,821  pneumatic  tube  messages. 

'"Journal  Telegraphique,  'Vol.  XXXVII,  No.  S,  May  25,  1913,  p.  106  and  note  11. 

'"Luxemburg  Belgium.  Netherlands.  Switzerland.  Germany.  Italy.  Denmark,  Austria,  and  Hungary  percentages 
derived    from    the    Journal    Telegraphique.    Vol.    XXXVII.  No.  11.  November  25.  1913. 

France  derived   from  Journal  Telegraphique,  Vol  XXXVI.  No.  11.  November  25.  1912. 

Norway  and  Great  Britain  derived  from  Journal  Telegraphique,  Vol.  XXXVII,  No.  5,  May  25,  1913. 

Sweden,  see  reference  "  above. 
"•Congressional  Record,  December  22,  1913,  p.  1,425. 


89 

'"  The  following  table  shows  how  these  population  statistics  were  computed  and  the  sources : 

POPULATION 


Country. 

Last  Census. 

Preceding 
Census. 

Increase 
Per  Annum. 

Estimated 
Population  (1912). 

Austria* 

28,571,934  (1910) 

7,423,784  (1910) 

2,757,000  (1911) 

39,601,509  (1911) 

64,925,993  (1910) 

46,122,463  (1912) 

20,886,487  (1910) 

34,671,377  (1911) 

259,891  (1910) 

6,022,000  (1911) 

2,391,782  (1910) 

5,604,192  (1912) 

3,753,293  (1910) 

1,071,000  (1912) 

4,669,000  (1912) 

26,150,708  (1900) 
6,693,548  (1900) 
2,589,000  (1906) 

60,641,489  (1905) 

19,254,559  (1900) 

32,475,000  (1901) 

236,543  (1900) 

5,263,000  (1901) 

2,240,033  (1900) 

3,315,443  (1900) 

242,123 
73,024 
33,600 

856,900 

163,193 

219,600 

2,335 

75,900 

15,175 

43,785 

29,056,000 

7,570,000 

2,790,000 

39,601,509  (1911) 
66,640,000 
46,122,463 
21,213,000 
34,890,000 
264,561 

6,077,900 

2,422,132 

5,604,192 

3,840,836 

1,071,000 

4,669,000 
96,299,000 

Belgium*    

Denmark*   

Germany*    

Hungary*    

Italy*  

Netherlands*   

Norway!  

Swcdent   

New   ZealandJ    

Australial     

United  States   

♦Geographisch-Statistische  Tabellcn  Aller  Lacnder   dcr   Erde,   Dr.   Franz   von   Juraschek,    for 
the  respective  years. 

^Official    Year   Book    of   the   Commonwealth  of  Australia. 

JStatistical  Abstract  of  the  Principal  and  Other  Foreign  Countries,  Thirty-eighth  Number,  Lon- 
don. 1913. 

tSveriges  Officiella  Statistik.    Telcfon  och  Telegraf  ar  1912  av.  Kungl.    Telegrafstyrelsen,  p.  40. 

'"Statistik  dcs  Ocsterreichischen  Post-und-Telcgraphenwesens  im  Jahre  1912.  Vienna,  1913,  pp.  124  and  125.  Covers 
statistics  of  letters  and  postcards  for  all  European  countries.  Statistics  for  France  obtained  from  same 
source   1912. 

'"Includes  domestic  and  foreign  sent.  Authorities:  letter  from  Office  of  Third  Assistant  Postmaster  General, 
December  22,  1913,  and  letter  from  Office  of  Second  Assistant  Postmaster  General,  December  23,   1913. 

'"Journal   Telegraphique,  Vol.  XXX VTT,   No.   11,   November  25,  1913,  pp.  254-258. 

'"Journal  Telegraphique,  Vol.  XXXVII,  No.  5,  May  25,  1913,  pp.  104-107. 

'"Great  Britain.     Report  of  the  Postmaster  General  on  the  Post  Office,  1912-1913.  p.  1. 

"Mdem,  pp.  15  and  68  (derived). 

'"Journal   Telegraphique.   Vol.   XXXVI,   No.   11,   November  25,  1912,  p.  281. 

'"Australia.     Postmaster  General's  Department.     Second  .\nnual  Report,  1911-1912,  p.  17. 

'"Statistik   des    Ocsterreichischen    Post-und-Telegraphenwesens  im  Jahre  1912,  Vienna,  1913,  p.  7. 

""Bericht  der  eidgcnoessisclicn  Tclegraphcn-und  Tclephonvcrwaltung  ueher  ihre  Geschaeftsfuehrung  im  Jahre  1912, 
p.  28.     Docs  not  include  inward  international  messages. 

'"  These  statistics  have  been  compiled,  except  as  noted,  from  unpublished  advices  from  the  various  governments. 
In  some  cases  (particularly  as  to  Norway  private,  Italy,  and  parts  of  the  British  system)  estimates  based 
on  the  number  of  calls  per  station  in  recent  years  have  Ijeen  multiplied  by  the  mean  number  of  stations  for 
1912,  as  officially   reported. 

""  Grande-Duchc  de  Luxembourg.  Administration  des  Postes,  Telegraphes,  et  Telephones.  Renseignemcnts  Statis- 
tiqucs  pour  Ics  Annccs  1911  et  1912,  p.  41. 

'"Journal  Telegraphique,  Vol.  XXXVII,   No.  5,  May  25,1913,  pp.  1(M  and  105. 

"•Journal  Telegraphique,  Vol.  XXXVII,  No.  11,  November  25,  1913,  p.  254. 

German  Empire : 

No.  of  Offices  with  permanent  service "21 

No.  of  Offices  with  full  or  extended  day  service 8,574 

No.  of  Offices  with  limited  day  service 38,972 

Total    48,16/ 


90 


Austria: 


No.  of  Offices  with  permanent  service S8 

No.  of  Offices  with  full  or  extended  day  service 396 

No.  of  Offices  with  limited  day  service 4,263 

Total     4717 

Hungary : 

No.  of  Offices  with  permanent  service 59 

No.  of  Offices  with  full  or  extended  day  service. 707 

No.  of  Offices  with  limited  day  service 4.228 

Total    4,994 

"Journal   Telegraphique,  Vol.  XXXVII,  No.  S,  May  25.  1913,  p.  106. 

No.  of  Offices  with  permanent  service 218 

Xo.  of  Offices  with  full  or  extended  day  service 502 

No.  of  Offices  with  limited  day  service 13,351 

Total     14,071 

"Journal  Telegraphique,  Vol  XXXVI,   Xo.  11,  Xovember  25.  1912,  p.  281. 

No.  of  Offices  with  permanent  service 21 

No.  of  Offices  with  full  or  extended  day  service 1,131 

No.  of  Offices  with  limited  day  service 20244 

Total    21,396 

*  Western   Union   Telegraph    Company — prepared    for   this  report.    Total  number  of  offices — 36,395. 
"Great  Britain.     Report  of  the  Postmaster  General  on  the  Post  Office,  1912-13,  p.  15. 

""Message  du  Conseil  federal  a  I'Assemblee  fedcrale  concernant  le  relevement  des  taxes  telephoniques  (Du  20 
Decembre,  1909),  p.  27. 

"•Number  of  post  offices  from  Postmaster  General's  Department.  Second  Annual  Report  1911-1912,  p.  6.  Number 
of  telegraph  offices  from  Journal  Telegraphique,  Vol.  XXXVII,  No.  5,  May  25,  1913,  pp.  104-105. 

"*  Statistics  and  statements  on  the  number  of  telephone  employees  from  Journal  Telegraphique,  Vol.  XXXVI,  No.  7, 
July  25,  1912: 

Norway,  page  155  and  note  IS,  page  161. 

Belgium,  page  150  and  notes  11,  12,  15,  and  16,  page  158. 

Sweden,  page  156,  and  notes  9,  10.  and  11,  page  164. 

Stvitserland,   page    157   and   note    13,   page  164. 

Netherlands,  page  155  and  notes  8  and  9,  page   162. 

France,  page  152  and  note  1,  page  159. 

Italy,  employees  and  traffic,  page  153. 

■"Journal  Telegraphique,  Vol.  XXXVI,  No.  7,  July  25,  1912,  p.  150;  note  21,  p.  158.  Each  international  message 
has  been  counted  as  one  without  regard  to  the  units  of  time  used. 

""Rapport  par  M.  le  Ministre  des  Chemins  de  Per,  Postes,  et  Telegraphes.  Partie  C.  Telegraphes  ct  Telephones. 
Bruxelles,   1911,  pp.  12  and  29. 

•"Translation.     Special  notes  on  the  form  "Bureau  International  de  I'Union  Telegraphique.     Statistiques  des  Tele- 
phones." 
•"Sveriges  Officiella  Statistik.    Telefon  och  Telegraf  ar  1911  av  Kungl.  Telegrafstylrelsen,  p.  7. 

""Compiled  from  the  list  of  telephone  exchanges  and  associated  information  in  the  New  Zealand  Post  Office 
Guide,   February,    1912,   pp.   434-438. 

"•Directions  for  Long  Distance  Service  over  Government  Lines  in  the  Telephone  Directory  (1914)  of  the  Copen- 
hagen Telephone  Company. 

■"Letter  from  the  Norwegian  Telegraph  Administration,  April  20,  1911. 

"•Telephone  Directory  (Sute  System)  for  Stockholm,  1913. 

"•Prepared  from  a  list  of  central  offices  and  switching  stations  published  in  the  Telephone  Directory  (State  System) 
for  Stockholm  1913.  The  statement  concerning  the  total  number  of  central  offices  and  switchmg  stations 
is  found  in  "Telefon  och  Telegraf  ar  1912  av  Kungl.  Telegraf styrelsen." 

"Guide  des  Correspondances  Telephoniques  en  Bclgique,   Septembre,  1910. 
"These  statistics  of  investment  were  derived  as  follows: 

A%utr\a: 

Number  of  Telephones:    Statistik  des  Ocsterrcichischen  Post-und  Tclegraphenwesens  im  Jahrc 

Telephone  Inv«tment':  '''Letter  of  Post  and  Telegraph  Administration,  Vienna,  dated  December 
15.  1913. 


91 

Belgium: 

Letter  of  Director  General  of  Telegraphs,  Brussels,  September  19,  1913. 

France: 

Letter  of  Direction  de  I'Exploitation  Tclephonique,  Paris,  October  28,  1913. 

German  Empire: 

Number  of  Telephones:    Letter  of  Imperial  Post  Office,  Berlin,  August  15,  1913. 
Telephone  Investment :    Imperial  Postal  Area,    $206,400,000— Archiv  fuer  Post  und  Telegraphic, 
Berlin,  September  1913,  p.  558. 
Bavaria — $18,554,000.     Letter  of   K.   Bayerisches  Staatsministerium  fuer  Verkehrsangelegen- 

heiten  (Postabteilung),  Munich,  July  3.  1913. 
Wurttemberg— $7,583,000.     Letter  of   Generaldirektion    der   K.   Wurtt.     Posten    und   Tele- 
graphen,   Stuttgart,  September   12,   1913. 

Hungary: 

Letter  of   Administration   of   Posts  and   Telegraphs,  Budapest,  August  6,  1913. 

Luxemburg : 

Letter  of  Administration  des  Postes  et  des  Telegraphes,  Luxemburg,  October  16,  1913. 

Australia : 

Number  of  Telephones:       Letter   of   Secretary,    Postmaster-General's   Department,    Melbourne, 

September   18,    1913. 
Telephone   Investment :     Postmaster-General's  Department.     Balance  Sheet  on  June  30,  1913,  p. 

23.     Represents  the  value  of  the  item  "Telephone  Lines  and  Equipment"  on  June  30,  1913, 

but  excludes  all  real  estate. 

Switserland: 

Number  of  Telephones:    Bcricht  der  eidgenoessischen  Telegraphen-und  Telephonverwaltung  ueber 

ihre  Geschaeftsfuehrung  im  Jahrc  1909,  p.  58. 
Telephone  Investment :    Hrgacnzender  Bericht  des    Bundesrates    an    die    nationalraetliche    Kom- 
mission  zur  Vorlage  bctrcffend  die  Erhoeh'.mg  der  Telephongebuehren  (vom  21  Maerz  1911). 
Tabelle  3,   plus  additional   investment   since  1909,  as  stated  in  a  letter  of  the  Director  Gen- 
eral  of   Telegraphs,   dated  June    18,   1913. 
'  Traffic  obtained  from  Bericht  der  eidgenoessischen  Telegraphen-und    Telephonverwaltung   ueber    ihre    Geschaefts- 
fuehrung im  Jahre  1911,  p.  28.    Revenue  obtained  from  a  letter  of  the  Director  of  Telegraphs.  Berne,  June 
18,  1913,  supplemented  by  the  Journal  Telegraphique,  Vol.  XXXVII,  No.  7,  July  25,  1913,  p.  159. 
'  Foreign  References : 

Christiania:     Number  of  Telephones:     Norges  Officielle   Statistik  V.    191.     Norges   Telegrafvaesen 
1911-1912,  p.  30. 
Rates:     Pristarif  for  Kristiania  telefonanlaeg. 

The  Hague:     Number  of  telephones:     Verslag  betreffende     den     Telephoondienst     der     Gemeente 
's-Gravenhage  over  1912,  p.  7. 

Rates:    The  maximum  rate  includes  an  "entrance"  fee  of  $10.     The  minimum   rate  includes  an 
"entrance"    fee    of   $8.     There    are   quoted   also  rates  somewhat  lower,  but  which  are  apparently 

obsolete  or   special   as   there   is   practically  no  development  at  those  rates. 
Reference:     Tarief  van  den  Gemcentelijken  Telephoondienst.     Taken  from  a  recent  subscribers' 

directory. 

Tokio:     Number  of  telephones:    Letter  of  Director  General  of  Posts  and  Telegraphs,  November  29, 
1912. 

Rates:    (Japanese)   Post  Office  Guide   (English  Edition),  April  1,  1911,  pp.  213  and  214.     Rates 
include  an  "entrance"  fee. 

Auckland:     Number  of  telephones:     New  Zealand.      Annual    Report    of    the    Post    and    Telegraph 
Department  for  the  Year  1912,  p.  46. 

Rates:      Post   and   Telegraph    Guide,    New   Zealand,   February,   1912,  pp.  439-441.     These   rates 
include  an   "entrance"   fee 

Amsterdam:     Number  of  telephones:     Jaarverslag   betrefTende    den    Telefoondienst    der    Gemeente 
Amsterdam  over  1911,  p.  5. 
Rates:    Telephone  Tariff  Sheet  of  Municipality  of  Amsterdam.    Rates  include  an  "entrance"  fee. 

Rotterdam:     Number  of  telephones:    Verslag  omtrent  den  tocstand  van  den  Gemeentelijken   Tele- 
foondienst te   Rotterdam  over  hct  jaar   1912. 
Rates:    Tariff  from  a  subscribers'  directory.    Rates  include  "entrance"   fees. 

Budapest:     Number  of  telephones:     Official  Report   of   the   Department   of   Posts,   Telegraphs  and 
Telephones   for   1912,   p.   59. 

Rates:    Lcs  Tarifs  Teliplmniques,  Bureau  International  des  .Administrations  Telegraphiqucs.  2nd 
Edition,   Berne,   1905,  p.  222. 

Paris:     Number  of  telephones:     Letter  from  Direction   de   I'F.xploitation   Tclephonique,    September 
19,  1913. 
Rates:     Telephones,  Postes  ct  Telegraphes,  Rcnscignemcnts  Pr.itiqucs.   Issued  by  .^ssociation  des 

Abonnes  au  Telephone,   Paris,  p.  8.     Does  not  include  the  telephone  instrument  which  must 

be  purchased  by  the  subscriber. 


St 


92 

"Statistics  of  number  of  telephones  taken   from   the   following  sources: 

Berne:     Bericht   der   eidgcnocssischen    Telegraphen-und  Telephonvenvaltung  ueber  ihre  Geschaefts- 
fuehrung  im  Jahre  lyiJ,  p.  59. 

Brussels:    Letter  of  the  Director  General  of  Telegraphs,  September  19,  1913. 

Sydney:    Estimated  for  1912  by  W.  H.  Gunston  in  (London)  Post  Office  Electrical  Engineers'  Jour- 
nal, Vol.  6,  part  2,  July,  1913,  p.  167. 

Rome:    State  System  only.    Relazione  sui  Servizi  Affidati  all'  Amministrazione  Telefonica,  May   11 
1913,  pp.  64  and  68.  ' 

Vienna:     Letter  of  the  Technical  Division  of  the  .\dministration  of  Posts  and  Telegraphs,  Vienna 
December   15,    1912. 

Berlin:     Letter  of  the  Imperial  Post  Office,  Berlin,  August  13,  1913. 

Paris:    Letter  of  Direction  de  I'ExpIoitation  Telephonique,  Paris,  September  19,  1913. 

Copenhagen:     Letter  of  Cophenhagen  Telephone  Company,   Copenhagen,   April   22,    1913. 

'  Bestimmungen  fucr  die  Benutzung  der  Femsprechanschluesse   (Official)    Berlin,   1910,  p.  20.     This  has  been  con- 
firmed by  official  correspondence. 

Compiled  chiefly  from  official  reports  included  in  exchanges  of  correspondence  between  the  various  foreign  gov- 
ernments and  the  American  Telephone  and  Telegraph  Company.  In  the  cases  of  Hungary,  Italy,  Sweden, 
and  Switzerland  the  published  reports  of  the  Administration  state  tlie  number  of  telephones  in  the  larger 
exchanges  at  least;  and  the  total  number  of  telephones  is  given  in  the  official  annual  reports  of  the 
Administrations,   excepting  Germany   (triennially)    France,  Belgium,  and  The  Netherlands. 

"These  unit  revenues  are  computed  by  dividing  the  mean  of  the  number  of  telephones  at  the  beginning  and  at 
the  end  of  the  fiscal  year  into  the  exchange  revenue  for  the  year  as  officially  reported.  The  sources  for 
the  data  as  to  the  number  of  telephones  and  as  to  revenues  are  as  follows : 

Austria:     Xumbcr   of   telephones:     Statistik   dts   Ocstcrreichischen  Post-und  Telegraphcnwesens  im 
Jahre   1912,  p.  7.     Revenue,   idem,  p.  91. 

Belgium:     Both  telephones  and  revenue:     Letters   of    Director   General   of   Telegraphs.    September 
19,  1913,  and  July  23,  1912. 

France:     Telephones  and  revenue:     Letter  of  Direction  de  I'ExpIoitation  Telephonique,  Paris.  Octo- 
ber 28,  1913. 

Great  Britain:     Number  of  telephones:   mean  of  the  number  of  telephones  on  March  31,  1912,  and 
on  March  31.  1913.   from  Report  of  the  Postmaster  General,  1912-1913,  p.  69. 
Revenue :     Obtained  from  provisional  accounts   in    the   Postmaster   General's   Report,    1912-1913, 

Great   Britain:     Number   of   telephones:    mean   of  the  number  of  telephones  on  March  31,  1912,  and 
on  March  31,   1913,   from  Report  of  the   Postmaster  General,  1912-1913.  p.  69. 
Revenue:     Obtained   from  provisional  accounts  in  the  Postmaster  General's  Report,  1912-1913, 
pp.  23  and  95,  as  follows: 

Total  Exchange  and  Toll  Revenue £5,746,924 

Total  Toll  (trunk)  Revenue 949,439 

Derived  for  Exchange  Revenue £4,797,485 

Hungary:     Letter  of  the  .Administration  of  Telegraphs.  Budapest,  September  2,  1913. 

Siiitzcrliind :     Number   of   telephones:     Bericht   der  eidgcnocssischen  Telegraphen-und  Telephonver- 

waltung  ueber  ihre  Geschaeftsfuehrung  im  Jahre  1912;  also  1911. 

Revenue:     Schweizerische  Post-Telegraphen-und  Telephon  Statistik  1912,  pp.  74  and  75. 

New  Zealand:     Number  of  telephones  and  revenue :     Annual   Report  of  the   Post  and   Telegraph 
Department  for  the  year  1912,  pp.  45  and  SO. 

Australia:     Number  of  telephones:     Letter  of   Secretary,   Postmaster   General's   Department,   Mel- 
bourne, September  18,  1913. 
Revenue:     Postmaster  General's  Department.     Balance  Sheet  on  30th  June,  1913,  p.  26. 
'Telcphonordnung  und  Telephontarif,  Vienna,  1913,  p.  7. 

'  Bestimmungen   fuer  die  Benutzung  der  Femsprechanschluesse,  Berlin,  1910,  pp.  20-23. 
'Translation.      Deutsche    Verkehrs-Zeitung,    21    Februar  1913.     Die  Zwcite  Beratung  des  Postetats  im  Reichstage. 

Sitzung  vom  15  Februar  1913. 
'Letter  from  General  Post  Office,  Great  Britain,  November  27,  1911. 
'No.    189    Senat.      Rapport    I'ait   au    nom    de    la    Commission    (lis   Finances   Chargce   d'examiner   le  projet   de  loi, 

adopte  par  la  (Thambre  des  Deputes,  portant  fixation  du  Budget  General  de  I'exercice  1911,  p.  94. 
*  N'o.  35,    Senat,   .Annee   1912.     Rapport   Fait   au   nom   de  la  Commission  des  Finances  chargce  d'examiner  Ic  projet 

de  loi,  adopte  par  la  Chamlire  des  Deputes,  portant  fixation  du  Budget  General  de  I'exercice  1912.  p.  39. 
'From  a  copy  of  the  Telephone   Regulations   forwarded  by  (he  Postmaster  General's  Department.  March  3,  1911. 
'In  preparing  this   table,  the   statistics  given  in  the  table  in    (2)   next  above  were  used.     In  equating  the  rates, 

the  statistics  of  telephone  operators'  wages  given  in  Appendix  E  were  used. 
'  The  following  are  the  sources  for  the  data  on  telephone  operators'  wages : 

Austria:    Letter  of  the  Handclsministcrium,  Vienna,  dated  January  28,  1913. 

Belgium:     Letter  of  the  Director  General  of  Telegraphs,   Brussels,   September  9,   1912. 

Denmark:     Letter  of  the  Copenhagen  Telephone  Company,  Copenhagen,   received   July  22,    1912. 

France:     Letter  of  the  Direction  de  I'ExpIoitation  "Telephonique,  Paris,  February  1,  1913. 

German  Empire:     Letter  of  the  Imperial  Post  Office,   Berlin.  January   10,    1913. 

Great  Britain:     Letter  of  General  Post  Office,  London,  January  20,   1913. 


93 

Xctherlands:     Annales    des    Postes,    Telegraphes   et  Telephones,  Mars  1913,  page  460. 

Norway:     Letter  of  the  Administration  of  Telegraphs,  Christiania,  January  7,  1913. 

Sweden:  Letter  of  Direction  General  of  Telegraphs,  Stockholm,  March  26,  1913;  also  letter  of 
Stockholm   Telephone  Company.  January  23,    1913. 

Szi'itccrluiid :     Letter  of  Obertelegraphendiri-ktion,  P.crne,  January  8.  1913. 
'"Les  Tarifs  Telephoniques,  Bureau  International  des  Administrations  Telegraphiques,  Berne,  1905,  p.  242. 
'"Idem,  p.   194. 

""  Telephonordnung  und  Telephontarif,  Vienna,  1910. 

'"Les  Tarifs  Telephoniques,   Bureau  International  des  Administrations  Telegraphiques,  Berne,  1905,  p.  295. 
'"Idem,  p.  127. 

'"  (Japanese)    Post  Office   Guide    (English  Edition),   p.   226. 

'"  Substantiated  by  Xew  Zealand   Po.'st  and  Telegraph  Guide.  February,  1912,  p.  442. 
'"Les  Tarifs  Telephoniques,   Bureau  International   des  Administrations    Telegraphiques,    Berne,    1905,    pp.    242   and 

243;  and  a  letter  of  the  Administration  of  Telegraphs,  Christiania,  April  20,  1911,  concerning  certain  changes 

in  the  charges  for  particular  person  service. 

"•Les  Tarifs  Telephoniques,  pp.  293  and  296. 

'"Idem,  pp.   127-129. 

'"  Bestimmungcn   fuer  die   Benutzung  der  Fernsprechanchluesse,  pp.  19  and  20. 

'"Telephonordnung  und  Telephontarif,  Vienna,  1910,  pp.  52,  81-83. 

""  This  information  is  derived  as  follows : 

Norway  and  France,  see  '"  above. 

Austria,  see  "°  above. 

Sweden,  see  "'  above. 

Denmark,   see   '"   above. 

New  Zealand,  see  "*  above. 

Germany,  see  '"  above. 

Belgium:      Les    Tarifs    Telephoniques,    Bureau    International    des    Administrations   Telegraphiques, 

Berne,   1905,  p.   113. 
Great  Britain:     Post  Office  Guide,  No.  231,  p.  107. 

'"  Bericht  der  eidgenoessischen  Tclcgraphen-und  Telephonverwaltung  ueber  ihre  Geschaeftsfuchrung  im  Jahre  1912,  p. 
28. 

"'Les  Tarifs   Telephoniques,  Bureau   International  des  Administrations  Telegraphiques,   Berne,   1905. 

'"Letter  of  OITice  of  the  Engincer-in-Chief,  General   Post  Office,  London,  July  26,   19U6. 

""  Letter  of  the  Imperial  Post  Office,  Berlin,  October  27,  1906. 

""Letter  from  the  Telegraph  Administration,   received  January  4,  1907. 

""Report  of  the  Debate   on   the   Budget,  Deutsche  Verkehrs-Zeitung,  February  28,  1913. 

"'  Letter  from  an  official  of  the  Danish  State  Telephone  Service,  August  15,  1906. 

■"No.  35  Senat.  Rapport  Fait  au  nom  de  la  Commission  des  Finances,  chargee  d'examiner  le  projet  de  loi,  adopte 
par  la  Chambre  des  Deputes,  portant  fixation  du  Budget  General  de  I'excrcice  1912.  Par  M.  Emile 
Dupont,  Scnateur.     Paris,  1912,  pp.  63-69. 

""  Postmaster-General's  Department.     Balance  Sheet  on  30ih  June  1913,  pp.  27  and  28. 

""The  source  of  the  population  statistics  is  given  in  "°  above.  The  sources  and  method  of  arriving  at  the  statistics 
of   interurban  conversations  are  as   follows : 

Austria:  Statistik  des  Oesterreichischen  Post-und  Telegraphenwesens  im  Jahre  1912,  Vienna,  1913, 
p.  7.  Conversations — 6254,765  reduced  20%  to  eliminate  duplications  in  accordance  with  note 
below. 

Belgium:  Letter  of  Director  General  of  Telegraphs,  Brussels,  September  19,  1913.  Conversations 
2,251,954.  These  are  actual  conversations  (nol  rate  periods  used),  but  include  594,106  outward 
and  inward  iniernational  conversations.  Hali  of  the  total  international  or  297,053  assumed  to 
be  inward,  and  deducted  from  the  above  total,  giving  1,954,901  as  the  number  of  actual  con- 
versations. 

France:  Journal  Telegraphique,  Vol.  XXXVII,  Xo.  7,  July  25,  1913.  p.  135.  Conversations — 34,- 
948,877,  reduced  by  6,989,975,  in  accordance  with  note  below. 

Great  Britain:  Report  of  the  Postmaster  General  on  the  Post  Office,  1912-1913.  Total  conversa- 
tions—36,019,086  (p.  69).  Total  inland  35,815,959  (p.  23).  Difference  equals  203,127  interna- 
tional inward  and  outward.  Deduct  one-half  (101,563)  from  total,  remainder  is  total  originat- 
ing interurban  messages.  Each  conversation  regardless  of  length,  is  counted  as  one  message, 
so   that   no   further   reduction   is   necessary. 

Hungary:  Journal  Telegraphique,  Vol.  XXXVII  No.  7,  July  25,  1913,  p.  155.  Total  conversations — 
2.3''1,434,  reduced  20'/c  in  accordance  with  the  note  below. 

Italy:  Journal  Telegraphique,  Vol.  XXXVI  No.  7,  July  25,  1912,  p.  153.  State:  2,892,880;  Company: 
1,511,252;  Total:  4,404,132,  reduced  by  20%  in  accordance  with  the  note  below. 

Netherlands:  Vcrslag  aan  de  Koningin  betrekkelijk  den  dienst  der  Posterijen.  der  Tclegrafie, 
en  der  Telefonie  in  Ncdcrland,  1912,  pp.  271  and  273.  Domestic:  5.865,072;  International 
inward  and  outward:  752.403:  (Julgoing  international,  taken  as  376,201,  added  to  domestic 
gives   6,241,274.     Reduced    by   20%   in    accordance  with  the  note  below. 


94 

Nonvay:  Government:  Xorges  OfficicUe  Statistik,  V.  191.  Xorgcs  Telcgrafvaescn,  1911-1912.  p. 
8.  Total:  4,989,912,  of  which  61,972  are  inward  international,  leaving  net  total  of  4,927,9-10 
conversations  (not  units).  Company:  Journ.il  Telcgraphique,  Vol.  XXXVII,  Xo.  7,  July  25. 
1913,  p.  157.  Total:  4.148.086.  Probably  units,  but  no  deduction  made.  There  is  probably 
a   large  duplication   for   messages   passing   over  both  private  and  government  lines. 

Sweden:  Sveriges  Officiella  Statistik.  Telefon  och  Telegraf  ar  1912  av  Kungl.  Telegrafstyrcl- 
sen,  p.  7-8.  Total:  18,381,940;  deduct  137,599  inward  and  transit  international,  net:  18,244,341 
conversations,  not  units. 

Stviterland :  Bericht  der  eidgenoessischen  Telegraphen-und  Telephonverwaltung  ucber  ihrc  Ges- 
chaeftsfuehrung  im  Jahre  1912,  p.  28.  Total  domestic:  11,996,565;  Outward  international: 
408,369;   Total:   12,404,934.     Deduct  20^0  as  per  note  below. 

New  Zealand:  Annual  Report  of  the  Post  and  Telegraph  Department  for  the  Year  1912.  Tola.' 
telegraph  and  toll  revenue,  including  miscellaneous  receipts :  £321,951  (p.  37).  Total  receipts 
from  paid  telegrams:  £313,960.  Difference  equals  toll  revenue  plus  miscellaneous  telegraph 
and  telephone  receipts:  £7,991.  Minimum  toll  rate:  3d.  (6  cents),  divided  into  £7,991  gives 
648,070  messages.  Since  miscellaneous  revenue  is  included,  and  since  average  revenue  per 
conversation  must  be  much  in  excess  of  the  minimum  rate,  due  to  longer  haul  conversations  and 
to  overtime,  the  number  of  conversations  must  be  very  much  less  than  the  number  which  has 
been    used. 

Australia:  Journal  Telcgraphique,  Vol.  XXXVII,  No.  7,  July  25.  1913,  .pp  ISO  and  151.  Docs  not 
include  Tasmania.     No  deductions  made. 

Note. — The  method  of  counting  interurban  conversations  prescribed  by  the  International  Telegraph 
Bureau  is  to  count  as  one  message  each  unit  rate  period  of  time,  or  fraction  thereof,  used 
in  a  conversation.  See'"  above.  This  results  in  increasing  the  number  of  conversations  for 
reporting  purposes  from  30^b  to  100%,  for  which  reason  in  deriving  the  statistics  used  above  a 
deduction  of  20%  from  the  reported  statistics  is  considered  conservative.  In  the  United  States, 
the  percentage  of  total  conversations  extending  beyond  three  minutes  is  from  18%  for  very 
short  hauls  to  more  than  50%  for  long  hauls.  In  Sweden,  the  number  of  rate  periods  is  from 
27%  to  327ci  in  excess  of  the  number  of  actual  conversations.     (See  reference'"  above). 

United  Stales:  The  number  of  originating  toll  and  long  distance  messages  of  the  -Associated  Bell 
Telephone  Companies,  of  companies  merged  during  the  year  with  Associate  Companies,  of 
controlled  connecting  companies  (including  companies  merged  therewith)  was,  in  1912,  246,388,- 
743.  The  number  of  stations  of  other  companies  (i.  e.,  independent  and  non-controlled  con- 
necting companies)  was  3,868.345.  The  Special  Report  of  the  Census  Bureau  on  Telephones 
1907  stated  that  the  aveiage  number  of  toll  and  long  distance  messages  per  station  of  such 
companies  was  26.  For  purposes  of  estimate,  this  average  has  been  reduced  to  20  per  station 
and  multiplied  by  the  number  of  stations  given  above.  This  gives  a  total  of  77,366.900  toll 
and  long  distance  messages  for  independent  and  non-controlled  companies  for  1912,  making  the 
total  for  the  United  States:  323,755,643  in   1912. 

'  The  authorities  and  sources  for  this  information  are  as  follows : 

POPULATION : 

As  given  in  reference  "^  above,  except  for  France,  for  which  one  year's  growth  has  been  estimated. 

TELEPHONES : 

Austria:  Statistik  des  Oesterreichischen  Post-und  Telegraphenwesens  im  Jahre  1912.  Vienna  1913, 
p.  7. 

Belgium:     Letter  of  Director  General  of  Telegraphs,   Brussels,  September   19,   1913. 
Denmark:     Letter   of   Direction    of   Telegraphs,   Copenhagen,   October   20,    1913. 
France:     Letter  of   Direction  de  I'ExpIoitation  Telephonique,   Paris,  October  28,  1913. 
Germany:    Letter  of  the  Imperial  Post  Office,  Berlin,  August  IS,  1913. 

Great  Britain— Municipal  Systems:     Hull,  Letter  of  Corporation  Telephone  Department,  September 
13,   1913;   Portsmouth,  "The  Portsmouth  Telephone   E.xchange   Accounts,    Year   Ending    March 
31,    1913,"   p.  8;    States   of   Guernsey,   "Guernsey   States  Telephone   Department   Balance  Sheet, 
Revenue   Statement   and    Statistics   for  Year  Ended  December  31,  1912,"  p.  7. 
Post   Office:     Report  of   the   Postmaster-General  on  the  Post  Office,  1912-13,  p.  69. 

Hungary:     Letter    of    the    Telegraph    Administration,   Budapest,    September  2,   1913. 

Luxemburg:  Administration  des  Postcs,  Telegraphes,  et  Telephones.  Rcnseignements  Statistiques 
pour  les  Annees  1911  et  1912,  p.  40. 

Netherlands:  Letter  of  Direction  General  of  Posts  and  Telegraphs.  The  Hague,  August  7,  1913,  sup- 
plemented by  Verslag  betreffende  den  Telephoondienst  der  Gemccnte's-Gravenhage  over  1912, 
p.  7 ;  and  Verslag  omtrent  den  toestand  van  den  Gcmcentelijken  Telefoondienst  te  Rotterdam 
over  het  jaar  1912,  p.  37. 

Norway:  This  is  an  estimate  for  January  1.  1913,  on  the  basis  of  the  official  statistics  for  June  30, 
1912,  for  the  State  System,  and  1910  for  the  private  systems,  as  given  in  Norges  Officielle 
Statistik.     Norges    Telegraf vaesen    1911-1912,  pp.  30  to  32;  and  36. 

Sweden:  Sveriges  Officiella  Statistik.  Telefon  och  Telegraf  ar  1912  av  Kungl.  Telegrafstylrcl- 
sen,  pp.  9  and  32. 


95 

Switzerland:     Bericht  der  eidgenoessischen  Telegraphen-und    Telephonverwaltung    ueber    ihre    Ge- 
schaeftsfuehrung  im  Jahre   1912,  p.  58. 

New  Zealand:     Annual  Report  of  the  Post  and  Telegraph  Department  for  the  Year  1912,  p.  50. 

Australia:    Letter   of  the   Secretary,    Postmaster-General's   Department,   Melbourne,   September   18, 

'The  authorities  and  sources  of  this  information  are  as  follows: 

TELEPHONES : 

London:    Letter   of   General   Post   Office,   London,  September  30,  1913. 

Paris:    Letter  of  Direction  de  I'Exploitation  Telephonique,   Paris,   September   1913. 

Berlin:     Letter  of  Imperial  Post  Office,  Berlin,  August  15,  1913. 

Vienna:     Letter   of   Technical   Division,    Post    and  Telegraph  Administration,  December  15,  1913. 

Glasgow:     See  London. 

Hamburg-Altona:     Same  as  Berlin. 

Budapest:    Annual  Report  of   Post  and  Telegraph  Department  for  the  Year  1912,  p.  59. 

Brussels:     Letter  of   Director  General   of  Telegraphs,   Brussels,    September   1913. 

Munich:     Letter  of  Ministry  of  Communications,  Post   Office   Division,   Munich,   July  3,   1913. 

Leipzig:     Same   as   Berlin. 

Copenhagen:    Letter  of  the  Copenhagen  Telephone  Company,  Copenhagen,  April  22,  1913. 

Dresden:     Same  as  Berlin. 

Marseilles:     Same  as  Paris. 

Breslau:     Same  as  Berlin. 

Lyons:     Same   as  Paris. 

Antwerp:     Same  as  Brussels. 

Liege:     Same  as  Brussels. 

Chemnitz:     Same  as  Berlin. 

Stockholm:     Sverige  Officiella  Statistik.     Telefon  och  Telegraf  ar  1912  av  Kungl.     Telegrafstyrel- 

sen,  p.  40. 
Triest:     Same  as  Vienna. 
Ghent:     Same   as   Brussels. 

POPULATION : 

Taken    from   authoritative   sources;    in   some  cases  given  by  officials  in  correspondence ;  and  in  some 
cases  partly   estimated. 

'  Number  of  telephones   in  most   cases  obtained  by  correspondence  with  government  officials. 

'  Preliminary   Report   of  the  Joint   Commission   on    Business     Method    of    Post    Office    Department    and     Postal 
Service,  Senate  Report  No.  201,  60th  Congress,  1st  Session,  p.  119: — 

"In  this  connection  we  might  call  attention  to  the  following  extract  from  a  letter  addressed 
under  date  of  January  14,  1907,  by  the  Secretary  of  State  to  the  Speaker  of  the  House  of  Represen- 
tatives in  connection  with  the  special  weighing  of  penalty  matter  originated  in  the  Department  of 
State  from  July  1  to  December  31,  1906: 

"  'It  is  proper  to  point  out  that  the  computation  of  cost  is  deceptive,  inasmuch  as,  were  the 
franking  privilege  discontinued,  the  greater  portion  in  weight  of  third-class  matter  would  not  be  sent 
by  mail,  but  would  be  forwarded  by  other  and  cheaper  means  of  transportation.'  " 


) 


bufpf  ^< 


^ 


( 


Reprinted  from  the  Metropolitan,  December,  19iJ^' 


T  - 

AUG  3      1915 
'^^^liy  Of  ll^^^ 


.^^• 


Shall  the  Government  Own 
the  Telephones  and  the  Telegraphs?  ]  '^\^  1  ^ 

(A  Reply  to  the  interview  with  Congressman  David  J.  Lewis  Published  in  the  August  1914  Metropolitan) 
By  the  Statistical  Department  of  the  American  Telephone  and  Telegraph  Company. 


1^  "** 


Strange  as  it  may  seem,  the  people  who  would  be  most 
vitally  affected  by  a  change  from  private  to  public  owner- 
ship of  telephones  are  not  the  stockholders  of  the  Bell 
System. 

The  reason  for  this  is  to  be  found  in  a  statement  made 
last  January  by  Congressman  David  J.  Lewis,  whose 
interview  on  this  subject  was  published  in  the  August 
issue  of  the  Metropolitan.  "Be  it  said  for  the  Bell  Sys- 
tem," admitted  Jlr.  Lewis,  "that  it  is  the  one  great 
corporation  in  our  country  that  has  not  issued  tons  of 
counterfeit  capital.  Its  stocks  and  bonds  to-day  repre- 
sent the  actual  contributions  of  its  shareholders  in  money 
to  a  great  common  enterprise."'  As  a  matter  of  fact  the 
actual  value  of  the  Bell  System's  property  considerably 
exceeds  the  par  value  of  its  securities,  so  that  the  most 
stockholders  could  suffer  would  be  the  temporary  incon- 
venience of  reinvesting  their  funds,  which  would  be  re- 
turned to  them  not  only  intact,  but  enhanced,  as  a  result 
of  this  singularly  conservative  and  economical  manage- 
ment of  their  property. 

The  interest  that  would  be  most  vitally  concerned  in 
the  proposed  change  is  that  of  the  American  public  itself. 

Few  of  us  realize  how  intimately  the  telephone,  under 
private  management  in  this  country,  has  been  woven  into 
our  everj'day  life.  In  our  cities  it  has  made  possible  the 
skA'scraper's  airj'  accommodations,  the  apartment-houses 
and  hotels,  which  have  raised  people  above  the  din  and 
dust  of  our  city  streets.  Outside  the  city  it  has  made 
suburbs  blossom  out  of  waste  places,  annihilating  dis- 
tance, and  bringing  the  businessman  in  an  instant  from 
home  to  business  and  business  to  home.  It  has  pene- 
trated into  the  rural  districts,  furnishing  the  American 
farmer  facilities  for  communication  hitherto  uadreamed 
of.  Money  is  moved  by  telephone.  Trains  are  moved 
by  telephone.  Buildings,  bridges,  tunnels,  reservoirs  and 
all  sorts  of  public  works  are  built  by  telephone.  Car- 
riasres  and  cars  are  called,  employees  secured,  emergency 
help  summoned — the  whole  machinery'  of  American  civi- 
lization kept  going  by  telephone.  .\s  one  prominent 
Englishman,  after  a  visit  to  this  country,  expressed  it, 
writing  in  the  Liverpool  Evening  Express:  "  'Wiretalk- 
ing*  in  America  is  all  done  so  quietly,  so  comfortably, 
80  easily,  so  surely — either  local  or  long  distance — that 
one  wonders  how  a  civilized  people  like  we  are  presumed 
to  be  can  stand  our  ridiculous  English  telephone  system. 
Truly  we  are  a  long-suffering  people.  Barely  does  an 
American  shout  in  his  telephone.    He  speaks  in  a  soft, 


easy  voice,  for  all  the  world  like  a  man  saying  his  pray- 
ers in  church." 

The  most  vital  consideration  as  to  Government  owner- 
ship of  telephones,  therefore,  is  the  effect  it  will  have 
upon  the  public. 

Now  the  public,  in  its  attitude  toward  the  telephone, 
is  concerned  primarily  in  its  most  efficient  development 
and  maintenance.  This  means  the  usefulness  of  the 
service,  and  its  price. 

The  first  point  made  by  Mr.  Lewis,  in  his  interview, 
was  that  "The  telephone  is  a  luxury  in  America;  only 
well-to-do  people  can  afford  it."  Reading  this,  one 
would  naturally  expect  the  interview  to  disclose  that 
the  proportion  of  Americans  with  telephones  is  far  below 
that  of  foreign  countries.  But  nothing  of  this  kind 
appears;  instead,  merely  another  assertion  of  a  similar 
nature  as  to  telegraphs. 

Xow  this  is  an  important  point.  The  extent  to  which 
any  service  is  used  is,  perhaps,  the  best  indication  as  to 
whether  the  service  is  good  and  cheap.  "The  proof  of 
the  pudding  is  in  the  eating."  What  are  the  facts  as 
to  the  development  of  the  telephone  service  here  and 
abroad  ? 

There  are  in  the  United  States  to-day  more  than 
9,000.000  telephones. 

Europe  has  over  four  times  the  population  of  the 
United  States. 

It  has  less  than  half  the  number  of  telephones. 

According  to  the  United  States  Census  statistics,  re- 
cently published,  this  country  has  more  than  nine  tele- 
phones for  every  hundred  inhabitants. 

Europe  (official  reports)  has  less  than  one  telephone 
for  every  hundred  inhabitants. 

To  be  exact,  the  United  States,  under  private  owner- 
.ship.  has,  in  proportion  to  population,  eleven  times  the 
number  of  telephones  in  Europe. 

Oreat  Britain  f Government  operation)  has  a  little 
over  700,000  telephones  in  the  whole  country.  This  is 
about  the  number  the  United  States  gained  in  one  year. 
Germany  (Government  operation)  has  less  than  two 
telephones  per  hundred  inhabitants.  Its  telephone,  from 
the  standpoint  of  the  number  of  people  it  can  reach,  is 
one-fifth  as  useful  as  the  American  telephone.  Switzer- 
land (Government  operation)  has  a  little  more  than 
two  telephones  per  hundrefl  inhabitants.  In  all  France 
(Government  operation)  there  are  barely  more  than  one- 
half  the  number  of  telephones  in  New  York  City  alone. 


The  country  is  served  by  considerably  less  than  one  tele- 
phone per  hundred  inhabitants.  Per  inhabitant,  the 
United  States  has  thirteen  times  the  number  of  tele- 
phones in  France.  Austria  (Government  operation)  has 
about  the  same  number  of  telephones  as  Boston.  Per 
inhabitant,  the  United  States  has  eighteen  times  the 
number  of  telephones  in  Austria. 

It  is  not  a  fact,  therefore,  that  "The  telephone  is  a 
luxur)'  in  America ;  only  well-to-do  people  can  afford  it." 

As  to  the  telegraph,  Mr.  Lewis'  assertion  is,  "Meas- 
ured by  use,  every  country  in  Europe,  even  the  poorest, 
sends  more  telegrams  per  person  (with  the  exception  of 
Russia)  than  does  the  United  States." 

In  view  of  the  impoverished  foreign  telephone  develop- 
ment, this  is  exactly  what  one  might  expect  to  find.  In- 
deed, if  Europe  had  no  telephone  service  at  all,  we 
should  expect  the  number  of  telegraph  mes.=ages  per 
person  to  be  still  greater.  Biit  as  a  matter  of  fact,  Mr. 
Lewis'  statistics  have  unjustly  punished  the  United 
States,  because  European  telegraph  statistics  are  heavily 
"padded,"  in  the  following  manner:  Most  European 
countries  are  small  in  area,  so  that  a  very  considerable 
amount  of  telegraph  traffic  is  international.  In  the 
statistics  Mr.  T^ewis  has  used,  an  international  message 
i.«  cnuntod  at  least  twice,  once  in  the  country  where  it 
originntcs  and  again  in  the  country  where  it  terminates; 
and  if  the  mcs.sage  passes  through  two  or  three  countries, 
it  is  counted  in  each  country  through  which  it  passes. 
The  true  value  of  ^fr.  I^ewis'  telesraph  traffic  statistics 
may  be  iuds/ed  from  the  fact  that  they  are  thus,  in  some 
cases,  inflated  by  as  much  as  100  per  cent. 

Now  it  is  clear  that  if  wo  are  tn  get  a  true  compari-son 
between  telegraph  traffic  here  and  abroad,  we  must  not 
only  cut  out  this  heavy  padding,  but  take  into  considera- 
tion also  the  other  types  of  traffic — telephone  and  mail. 
And  if  we  do  this — if  we  cut  out  inward  international 
messages.  "tran?it"  international  messages,  and,  further, 
"service"  (uncommercial")  messages,  deducting  at  the 
same  time  ten  per  cent  from  .American  telegraph  mes- 
sages for  possible  duplication.* — here  is  what  we  get: 

FIRST-CI,ASS  MAIL,  TKIvKGRAI'H  AND  TRLRPHONE 
TRAI'TIC  I'KR  INHABITANT,  YKAR  1912 


Country 

M.ul 
I'ieces  Per 
Inhnbitnnt 

Telegrnpli 
Messnifes 
Per  In- 
hnbitnnt 

Telcphont- 

Mcssiiircs  Per 

Inhnbitnnt 

Totnl 

Austria 

Belifium 

Dcntnnrk 

Fniucc 

Germany 

Grent  Britnin  . 
Hungnry 

56.5 

50.8 

58.7 

43.5  (1912) 

81.8 

91.0 

28.5 

21.6 

82.6 

49.3 

39.6 

35.6 

98.1 

106.0 

.50 
.82 
.62 

1.15 
.75 

1.77 
.48 
.63 
.57 
.76 

1.23 
.49 
.83 

1.05 

12.55 

18.23 

81.24* 

8..36 

34  89 

23.81 

9.59 

9.93* 

18.45 

27.92* 

70.0"* 

77.47* 

17.85 

161.99 

69.55 
69.85 
140.56 
5301 
117.44 
116.58 
38.57 
32  16 

I.tixctnburtr  — 
NetluTlimtls  ... 

Nonvny 

Sweden 

Swilxcrlnnd  .... 

rnile<l    Stnles.. 

101 .62 
77  98 
110.83 
113.56 
116.78 

269.04 

•  Pnrtly  private. 


The  fad  is,  therefore,  that,  contrary  to  Mr.  Lewis* 
contention,  Americans  use  telephones  far  more  under 
private  ownership  than  under  government  ownership, 
and  use  telegraphs  more,  except  as  to  those  government- 
ownership  countries  where  an  impoverished  telephone 
development  forces  an  abnormal  use  of  the  telegraph. 

The  next  point  taken  up  in  the  interview  is  the  mat- 
ter of  rates.  In  exactly  nine  lines  of  print  we  find  a 
complete  comparison  of  telegraph  rates  made  with  nine 
foreign  countries — and  not  a  word  of  qualification.  Now, 
anyone  who  has  examined  foreign  telegraph  rate  sched- 
ules knows  that  unless  a  number  of  very  important  con- 
siderations are  taken  into  account,  such  comparisons  are 
as  worthless  as  comparisons  of  butter  and  buttercups. 
For  example,  the  address  and  signature  on  telegrams 
are  charged  for  abroad,  in  addition  to  the  regular  rate 
quoted;  they  are  free  in  this  country.  The  average 
number  of  such  words  per  telegram  is  ten.  Again,  there 
are  two  kinds  of  telegrams  abroad — "urgent,"  which 
correspond  to  our  regular  telegraph  messages,  and  "ordi- 
nary," a  deferred  service  which  mu=t  wait  upon  the 
"urgent."  Rates  for  "urgent"  telegrams  are  three  times 
the  "ordinary"  rates.  Mr.  Lewis  quotes  only  "or- 
dinary" rates  in  comparing  them  with  American 
telegraph  rates.  There  are  numerous  other  differences, 
by  omitting  which  Mr.  Lewis  has  penalized  American 
telegraph  rates;  but  if  we  make  an  allowance  for  the 
diffcrenoe  as  to  address  and  signature  alone,  we  find  that, 
for  comparable  distance?,  foreign  "ordinarr"  rates  in 
many  eases  approximate  the  American  rates,  and  foreign 
"urgent"  rates  are  in  most  cases  muoli  higher,  and  in 
several  instances,  as,  for  example.  Germany,  Italy,  Den- 
mark and  .\ustria,  from  two  to  three  times  as  high. 

But  when  we  come  to  that  part  of  the  interview  deal- 
ing with  telephone  rates,  we  find  comparisons  still  more 
startling.  To  illustrate  the  kind  of  comparisons  which 
were  made  we  might  take  the  following  example: 

Cost  of  nutomobiles  in  Paris $7,500.00 

Cost  of  nutomobiles  in  New  York  City  500.00 

Cost  of  telephones  in  Paris 77.20 

Cost  of  telephones  in  New  York  City 228.00 

Not  to  mention,  in  the  first  comparison,  that  the  Mer- 
cedes car  was  taken  for  Paris,  and  the  Ford  for  New 
York,  is  just  as  serious  an  omission  as  not  to  mention 
that  the  Paris  telephone  exchange  is  one-fifth  as  large, 
and  hence  far  less  expensive  to  operate,  than  the  New 
York  exchange;  that  in  Paris  vou  buy  your  own  tele- 
phone instrument;  that  only  from  one-fourth  to  one- 
lialf  of  one  per  cent  of  New  York  telephone  subscribers 
pay  the  rate  quoted,  $52S,  although  the  rate  quoted  for 
Paris  is  the  only  rate  available  in  Paris,  etc. 

Of  course,  to  get  anywhere  in  such  comparisons,  you 
must  take  into  account  not  only  tiie  size  of  the  exchange, 
but  the  number  of  subscribers  nMnr]  the  service  at  the 
rate  quoted  and.  above  all,  the  average  rife  paid.  For 
instance.  Budapest  has  tlie  .same  size  exchange  as  St. 
Paul,  ^finne.^ota.  Ninety-four  per  cent  of  the  St.  Paul 
subscribers  pay  less  than  the  lowest  possible  rate  in 
Budapest.  Similar  results  may  be  shown  for  such  com- 
jmrative  exchanges   as  The   Hague   and    San   Antonio, 


Texas;  Tokyo  and  Omaha,  Xehraska;  Amsterdam,  Hol- 
land, and  Rochester,  New  York ;  Rotterdam  and  St. 
Joseph,  Missouri,  etc.  Even  taking  Paris,  whose  ex- 
chan<:e  is  only  one-fifth  the  size  of  the  New  York  ex- 
change, we  find  that  79  per  cent  of  the  subscribers  in 
New  York  Cit)-  pay  less  than  the  Paris  rate.  Ninety  per 
cent  of  the  Philadelphia  subscribers  and  01  per  cent  of 
the  Chicatro  subscribers  pay  less  than  the  Paris  rate. 

Not  only  is  the  average  charge  for  telephone  service 
abroad  greater  than  in  this  country,  when  the  same  units 
of  measurement  arc  used,  but  when  you  get  down  to  the 
smaller  places  foreign  rates  are  so  much  higher  that  they 
are  virtually  prohibitive,  especially  in  the  rural  districts. 
This  goes  a  long  way  to  explain  why  the  British  Post- 
master-General recently  prided  himself  on  a  total  of 
?,.'?00  farmers'  telephones  in  the  entire  country. 

But.  after  all,  what  good  are  rate  comparisons,  if  you 
don't  consider  what  you  get  for  your  money?  Not  to 
speak  of  the  quality  of  foreign  service — which,  as  every 
one  who  has  traveled  abroad  knows  is  far  inferior  to  the 
American — take  the  simple  matter  of  the  quantiiy  of  ser- 
vice; the  hours  during  which  the  telephone  service  is 
open  to  the  public.  In  Switzerland,  for  example,  96 
per  cent  of  the  telephone  exchanges  close  at  9  o'clock 
p.  m.  Forty-six  per  cent  operate  from  7  a.  m.  to  noon, 
then  close  two  hours  for  lunch,  open  again  until  6  p.  m., 
close  two  hours  for  tea,  then  open  at  8  p.  m.,  stay  open 
till  8.30  p.  m.,  and  put  up  the  shutters  for  the  night. 
This  is  a  sample  of  the  kind  of  service  you  will  get 
throughout  the  length  and  breadth  of  Europe,  and  yet 
rate  comparisons  are  made  in  all  seriousness,  and  abso- 
lute conclusions  drawn  therefrom  and  presented  without 
a  single  qualification  to  the  American  public. 

And  the  toll  (long  distance)  rate  comparisons  made 
by  Mr.  Lewis?  It  will  be  remembered,  a  table  of  "long 
distance  rates"  was  published  in  the  interview.  On 
the  face  of  this  table  American  toll  rates  were  made  to 
appear,  by  comparison,  shockingly  exorbitant.  But — 
behind  the  table  there  lurked  a  number  of  Africans,  care- 
fully concealed  from  public  view. 

Here  is  one  of  them. 

Abroad  they  have  two  kinds  of  long  distance  service, 
"preferred"  and  "deferred,"  the  latter  costing  about 
one-third  the  former.  Mr.  Lewis  carefully  .selected  the 
"deferred"  raien  nnd  then  contrasted  them  with  ours. 

This  "deferred"  service  in  foreign  countries  is  inter- 
esting. Say  you  live  in  Germany.  You  want  to  talk 
to  an  out-of-town  businessman.  You  get  an  "assign- 
ment." They  tell  you  you  can  have  the  connection  at 
ten  o'clock — perhaps  the  same  day,  perhaps  the  next  day, 
if  the  appointments  are  all  taken  up.  The  connection 
is  put  up  for  you  at  ten.  If  you  are  not  there  you  are 
charged.  If  you  are  there,  you  must  finish  your  con- 
versation within  a  .stipulated  period.  If  you  do  not 
finish  in  the  given  period  you  are  cut  off  and  you  can- 
not talk  atrain  until  your  turn  comes  around  again — 
which  mav  not  be  until  the  next  day. 

Now  the  fnct  is  that,  for  the  shorter  distances,  within 
which  four-fifths  of  the  traffic  falls,  American  toll  rates — 


even  on  a  nominal  basis,  and  not  considering  that  a 
dollar  here  often  corresponds  to  a  half  or  quarter  of  a 
dollar  abroad — are  lower  than  in  foreign  countries  for 
regular  messages;  and  if  we  take  foreign  international 
messages,  which  Mr.  Lewis  completely  ignored,  we  find 
they  are  from  three  to  four  times  as  high  as  our  rates 
for  corresponding  distances. 

As  for  the  longer  distances,  the  foreign  service  is 
rarely  commercial.  Otliciiil  complaints  in  the  German 
Reichstag  amply  testify  to  this.  Or,  take  Chamb^ry,  in 
France,  as  an  example.  The  Cliambcr  of  Commerce  com- 
plains that  it  cannot  get  connection  with  Paris  (280 
miles)  until  the  day  after  the  call  is  filed.  Imagine  liv- 
ing in  Paris  and  being  detained  in  Chamb^ry;  you  call 
up  your  home  to-day,  you  get  it  to-morrow,  and  tell  your 
wife  you  won't  be  liome  last  night.  Rate  comparisons, 
in  such  cases,  are  nothing  less  than  absurd. 

In  short,  none  of  Mr.  Lewis'  assertions  as  to  rates  are 
warranted  by  the  facts.  It  is  not  a  fact  that  telegraph, 
'Hocal"  telephone  or  long  distance  telephone  rates  are 
lower  abroad  than  in  the  United  States. 

Do  government-owned  telephone  and  telegraph  sys- 
tems pay?  The  interview  with  Mr.  Lewis  leaves  the 
impression  they  do.  The  writer  has  before  him  a  re- 
cently issued  statement  of  the  British  Post-Office  Depart- 
ment, admitting  it  has  lost  a  hundred  and  ten  million 
dollars  on  its  telegraph  since  the  government  took  it  over. 
Similarly,  a  study  of  all  available  reports  and  official  in- 
formation on  the  combined  operations  of  government- 
owned  and  operated  telephones  and  telegraphs  shows 
that  they  are.  without  exception,  operated  at  a  deficit. 
It  is  not  a  fact  that  government  telepiione  and  telegraph 
systems  abroad  are  productive  of  profit. 

The  interview  goes  on  to  cite  a  score  or  more  American 
cities  in  which  telephone  rates  are  shown  to  be  strangely 
at  variance  with  one  another;  and  the  next  paragraph 
proceeds  to  attribute  the  difTcrences  to  the  effects  of  com- 
petition. Here  is  what  actually  happened  :  Mr.  Lewis  sim- 
ply selected  the  highest-priced  business-service  charges 
for  his  "no  competition"  rates,  and  the  lowest-priced 
residence  charges  for  his  "competition"  rates,  and  then 
"compared"  them.  Incidentally,  Mr.  Lewis  procured 
these  "statistics"  from  a  Bell  competitor  and  presented 
them  to  the  public  in  toto  as  gospel. 

Most  striking  of  all,  however,  were  the  efficiency  com- 
parisons which  were  made  between  government  and  pri- 
vate operation.  To  many  of  us,  acquainted  with  friends 
"working  for  the  government,"  it  doubtless  came  as  a 
distinct  surpri.se  to  learn  what  marvelous  strides  in 
efficiency  our  government-employed  friends  were  really 
making.  A  close  .scrutiny  of  the  statistics  which  were 
used,  however,  will  prove  illuminating. 

If  one  will  look  into  the  voluminous  report  prepared 
by  the  clerks  of  the  Post-Office  Department,  upon  which 
Mr.  Lewis  based  his  statistics,  one  will  find  that  the  fig- 
ures for  foreign  telephone,  telegraph  and  post-office  sys- 
tems bristle  with  footnotes.  These  footnotes  say,  in 
efTect,  that  you  cannot  determine  anvthing  ais  to  the  re- 
sults of  operation  or  the  number  of  employees  in  each 


service,  because  the  post-office  and  telephone  and  tele- 
graph are  operated  jointly,  and  their  results  are  not 
shown  separately.  For  instance,  in  Norway  most  of  the 
telephone  employees  perform,  also,  telegraph  duties. 
Only  a  small  part  of  the  whole  are  engaged  solely  in 
telephone  work.  How  to  figure  your  efficiency?  Mr. 
Lewis  took  this  small  number  of  employees  engaged 
solely  in  telephone  work,  ignored  the  rest,  and  divided 
this  nvmher  into  the  total  number  of  telephone  messages 
for  Norway.  The  result  was  published  as  Norway's  tele- 
phone "efficiency."  Similar  results,  by  similar  methods, 
were  obtained  for  the  other  countries. 

If  we  must  demonstrate  statistically  that  private  em- 
ployees are  more  efficient  than  holders  of  government 
jobs,  a  significant  comparison  would  be  the  plant  cost 
per  telephone,  under  public  and  under  private  owner- 
ship, for  the  more  money  you  spend  in  doing  a  given 
amount  of  work,  the  less  your  efficiency.  The  plant  of 
the  Bell  System,  including  long  distance  lines,  stands 
at  $153  per  station.  The  corresponding  official  figures 
for  foreign  countries  are  as  follows:  Australia,  $10 
higher;  Germany.  $25  higher;  Switzerland,  $39  higher; 
Hungary,  $10  higher ;  Austria,  $60  higher;  France,  $100 
higher,  and  Belgium,  $125  higher. 

It  is  difficult  to  understand  how  Mr.  Lewis  could  have 
attempted  a  measurement  of  Post-Office  efficiency  on  the 
basis  of  the  "average  mail  pi.ece  per  employee,"  when  we 
recall  tJiat  the  Joint  Corigre=sional  Commission  on  Busi- 
ness Method  in  the  Post-Office,  one  of  whose  members 
was  the  Hon.  John  A.  Moon,  Chairman  of  the  House 
Committee  on  Post-Offices  and  Post  Eoads,  was  forced, 
after  thorough  investigation  by  the  most  expert  account- 
ants in  the  country,  to  admit  that  the  Department's 
inefficiency  wa=  so  appalling,  that  "Under  such  a  system 
a  large  railroad,  commercial  or  industrial  business  would 
inevitably  go  into  bankruptcy,  and  t!ie  Post-Office  De- 
partment has  averted  that  fate  only  because  the  United 
States  Treasury  has  been  available  to  meet  deficiencies." 
And  when  it  came  to  striking  an  efficiency  average,  the 
exports  employed  by  the  Commission  threw  up  their 
hands.  "We  have  seen  in  difFcrnnt  efficiency  statements 
of  work  done  that  exactly  the  same  class  of  work  done  by 
individuals  has  varied  in  exceptional  cases  from  under 
2.000  to  over  22,000  operations  in  the  same  period  of 
time." 

AVhat  is  the  method  whereby  Mr.  Lewis  proposes  to 
acquire  the  telephone  and  telegraph  systems?  He  would 
have  the  government  take  over  the  telephone,  but  not  the 
telegraph  :  then  compete  on  telephone  lines  with  the  ex- 
isting telegraph  lines,  until  the  latter  have  been  clubbed 
into  insensibility,  when  tliey  will  either  drop  out  of  ex- 
istence, or  be  taken  over  bodily  by  the  government  at 
junk  vahie.     Does  anyone  believe  this  type  of  warfare 


will  be  assumed  by  a  great  government,  or  countenanced 
for  a  moment  by  the  American  people  ? 

Mr.  Lewis  is  to  purchase  the  telephone  by  lining 
nearly  a  billion  dollars  of  oO-j'ear  bonds — at  3  per  cent. 
Among  the  world's  nations  the  United  States  is  remark- 
able for  borrowing  so  little  and  spending  so  much  out 
of  its  current  income.  Its  credit  on  that  account  is  high. 
Yet  its  Panama  Canal  3s  have  been  selling  below  par. 
Nofrn-ithstanding,  the  United  States,  according  to  Mr. 
Lewis,  is  to  double  its  National  Debt — and  still  maintain 
3  per  cent  credit. 

But  even  assuming  that  this  were  possible,  no  student 
of  public  affairs  believes  that  the  difference  between  the 
public  and  private  interest  rate  would  equal  the  financial 
loss  which  would  be  entailed,  by  subjecting  so  vast  a 
system  as  the  telephone  to  the  regime  of  political  par- 
tisanship and  Pork  Barrel  methods  with  which  we  are 
all  so  familiar,  whereby  appropriations  are  no  longer 
to  be  made  the  result  of  careful  and  scientific  manage- 
ment, but  subject  to  all  the  evils  of  log-rolling  and 
political  bickering — the  football  of  ambitious  or  un- 
scrupulous politicians. 

The  telephone  rates  to-day  represent  actual  cost,  as 
supervised  by  our  public  regulating  bodies,  upon  a  basis 
of  the  most  efficient  management  of  the  property'  used 
and  useful  in  the  service.  The  net  interest  and  dividend 
return  of  the  Bell  System  during  the  last  year  represents 
4.03  per  cent  of  the  actual  property  value — as  sworn  to 
in  the  Official  Hcport.  If  the  government  acquired  the 
service  and  lowered  the  rates,  the  inevitable  result  would 
be  a  deficit — worse  by  far  than  the  present  Post-Office 
deficit:  and  while  the  latter  mav  be  justified  because  the 
mails  are  universal  in  iise,  who  can  justify  a  system 
wborohv  nine-tenths  of  the  population  is  to  be  taxed  to 
help  pay  the  telephone  bills  of  the  other  tenth  ? 

To  urge  government  ownership  of  telephones  in  this 
country  one  must  be  prepared  to  say  that  government 
control  has  proved  a  failure.  Is  Mr.  L^wis  prepared  to 
take  this  stand,  with  regulation  nractically  a  new  thing? 
Is  he  prepared  to  sav  that  all  the  efforts  now  being  di- 
rected by  the  public  in  improving  and  strengthening  our 
machinery  of  regulation  are  purelv  so  much  wasted  ef- 
fort :  that  Congress  ifeself  is  wasting  tiio  public  funds 
upon  a  fruitless  ta.sk,  in  its  work  recently  begun,  through 
the  Interstate  Commerce  Commission,  of  undertaking 
the  valuation  of  all  telephone  and  telegraph  companies 
in  this  country?  Would  it  not  be  wiser  to  heed  the 
advice  of  President  Wilson  and  remember  that  "such  are 
the  difficulties  in  the  way  of  establishing  and  maintain- 
inir  camful  Inisiness  manasement  on  the  part  of  the  gov- 
ernment that  control  ought  to  be  preferred  to  direct  ad- 
ministration in  as  many  cases  as  possible — in  every  ca!>e 
in  whicli  control  without  administration  can  be  made 
effectnal"? 


LEWIS -SYLVAN  DEBATE 


ON 


GOVERNMENT  OWNERSHIP 
OF  TELEPHONES  AND  TELEGRAPHS 


Gi\\jig  Speech  of  Mr.  T.  P.  Sylvan,  Assistant  to  Vice-President, 
New  York  Telephone  Company,  in  Debate  with  the  Hob. 
David   J.  Lewis,   Representative   from  Maryland, 
before  the  Providence  Economic  Clab,  Provi- 
dence, Rhode  Island,  April  22,  1914. 


-vA:.r/; 


SUPPLEMENT  No       7-  ' 

'■■""""-■••I 

FOR 
BRISF  OP  AROCTMSNT8 


American  Telephone  and  Telegraph  Company 

Commercial  Engineer's  Office 
New  York 


lilt 


Following  is  the  address  of  Mr.  T.  P.  Sylvan,  Assistant  to  Vice- 
President,  New  York  Telephone  Company,  in  a  debate 
with  Congressman  David  J.  Lewis,  of  Maryland,  held  be- 
fore the  Providence  Economic  Club,  Providence,  Rhode 
Island,  April  22,  1914.  Owing  to  the  limitation  of  time,  a 
number  of  quotations  given  here  in  full  were  merely  re- 
ferred to  in  the  abstract  in  the  actual  delivery  of  the  address : 


Mr.  President  and  Members  of  the  Economic  Club: 

I  trust  you  will  bear  with  me  because  I  have  got  somewhat  of  a 
cold,  but  I  shall  try  to  make  myself  heard.  It  is  indeed  a  pleasure  to 
come  to  a  gathering  of  this  kind  and  see  so  many  people  interested  in 
this  subject,  because,  from  my  way  of  looking  at  it,  all  that  we  need  is 
a  careful  consideration  of  this  question.  Like  Mr.  Lewis,  we  too,  are 
content  to  appeal  to  the  good  sense  of  the  people.  We  have  got  to 
approach  this  thing  in  a  calm  and  deliberate  manner.  There  is  no 
necessity  of  becoming  excited.  The  country  is  not  particularly  suffer- 
ing in  the  meantime. 

No  Stockholders'  Brief 

I  do  not  come  here  tonight  with  a  brief  for  the  stockholders  of 
the  Bell  System.  Our  organization,  as  Mr.  Lewis  himself  has  stated, 
in  his  address  before  the  Republican  Club  in  New  York  City  last  Jan- 
uary, is  one  of  the  few  in  the  country  whose  securities  are  free  from 
water  or  inflation. 

His  words  were: 

"Be  it  said  for  the  Bell  System  that  it  is  the  one  great  corporation  in  our 
country  that  has  not  issued  tons  of  counterfeit  capital.  Its  stocks  and  bonds 
to-day  represent  the  actual  contributions  of  its  shareholders  in  money  to  a 
great  common  enterprise,  and  we  will  not  have  that  unfortunate  circumstance 
to  deal  with  in  the  valuation  of  their  properties." 

The  capitalization  of  the  Bell  System  is  based  upon  honest  invest- 
ment, and  the  actual  value  of  the  property  is  considerably  in  excess  of 
the  par  value  of  the  securities;  so  that  if,  after  a  calm  and  painstaking 
investigation,  the  Government  should  decide  to  take  over  the  property 
of  the  Bell  System,  it  would  have  no  trouble  from  that  score,  nor  would 
the  stockholders  suffer  any  loss  save  the  temporary  inconvenience  of 
reinvesting  their  funds,  which  would  be  returned  to  them  intact. 

3 


Legal  Objections  Not  Considered 

Nor  do  I  approach  this  subject  from  the  legal  standpoint.  To  be 
sure,  the  legal  problem  involved  is  by  no  means  unclouded,  and  pre- 
sents a  number  of  very  grave  questions  whose  determination  is  far 
from  simple.  Are  the  State  of  Rhode  Island  and  the  City  of  Provi- 
dence, for  instance,  ready  to  give  up  their  control  and  supervision 
over  so  important  a  part  of  their  affairs  as  the  telephone,  and  allow 
the  Federal  Government  to  step  in  and  silence  their  authority  forever, 
eliminating,  at  the  same  time,  the  important  source  of  revenue  from 
taxation,  which  is  now  being  derived  from  the  telephone  property? 
However,  I  do  not  propose  to  take  up  this  and  other  similarly  import- 
ant questions,  because,  I  am  sure,  a  consideration  of  the  purely  eco- 
nomic aspects  of  the  subject  will  decide  this  case  in  favor  of  the  present 
system  of  regulated  private  ownership,  and  make  unnecessary  the  con- 
sideration of  the  legal  or  other  objections. 

Efficient  Service  the  Main  Question 

I  approach  this  subject  from  a  far  broader  point  of  view;  from 
the  standpoint  of  service — efficiency  of  service.  That  is  the  basis  upon 
which  this  whole  matter  of  government  ownership  must  be  settled. 
And  when  I  say  "efficiency,"  I  mean,  of  course,  the  quality  of  the 
service  and  the  price  of  the  service,  for,  after  all,  these  are  the  ques- 
tions in  which  the  public  concerns  itself  in  its  attitude  toward  the 
telephone. 

Now  in  this  question  of  efficiency  of  service,  the  interests  of  the 
public,  of  course,  very  properly  take  first  place ;  and  we,  the  employees, 
— for  I  number  myself  one  of  an  army  of  150,000  who  are  serving  the 
public  in  this  matter — must  necessarily  take  the  second  place.  From 
my  way  of  looking  at  this  telephone  proposition,  it  is  not  a  question  of 
ownership  so  much  as  it  is  a  question  of  the  organization  itself — a 
great  big  machine  that  is  serving  you  to-day  ;  and  that  machine  consists 
of  this  army  of  employees,  and  anything  which  will  make  that  machine 
more  efficient  and  which  will  permit  it  to  work  more  efficiently  and 
more  economically  than  it  does  to-day,  is  to  be  commended,  but  any- 
thing which  will  make  that  machine  run  more  slowly  or  with  more 
difficulty,  must  be  discarded.  To  show  how  important  a  factor  is  the 
personnel  of  the  organization,  as  distinguished  from  the  owner — the 
stock  and  bond  holder — I  might  mention  that  the  Bell  System  to-day 
pays  out,  in  the  form  of  salaries  and  wages,  50%  of  the  money  it 
receives  from  the  public,  and  the  amount  paid  out  in  the  form  of  inter- 
est and  dividends  represented,  during  the  last  year,  but  4.92% — less 
than  5% — upon  the  actual  plant  in  service.  Now,  I  say,  gentlemen,  a 
lot  of  credit  is  due  to  great  men  like  Mr.  Vail — and  Mr.  Lewis  is  will- 
ing to  and  does  give  him  a  measure  of  that  credit — when  you  stop  to 
think  that,  in  reducing  this  interest  charge  to  4.92%,  he  has  done  so  by 
taking  advantage  of  the  credit  of  our  Company.  More  than  $26,- 
000,000  has  been  turned  into  the  treasury  of  the  American  Telephone 
and  Telegraph  Company  by  the  use  of  convertible  bonds  at  times  when 
our  credit  warranted  getting  prices  in  excess  of  par.     It  is  by  this 


means  that  we  have  been  enabled  to  cut  down  the  interest  charges  on 
investment  to  the  low  figure  of  4.92%  on  the  value  of  the  plant  in 
service.  While  it  is  true  that  8%  is  paid  on  some  of  our  securities,  less 
is  paid  on  bonds  and  other  securities,  and  nothing  at  all  on  the  $26,- 
000,000  just  mentioned. 

Public  Service  Motive  Qualified 

Mr.  Lewis  lays  great  stress  upon  the  "public  service  motive"  as 
distinguished  from  the  "private  service  motive,"  and  attempts  to  show 
how  the  "public  service  motive"  has  dominated  the  administration  of 
the  Post  Office  Department.  Now  I  say  that  the  "public  service  mo- 
tive," in  its  narrower  sense,  which  absolutely  ignores  questions  of  cost 
or  distribution  of  cost  burden,  is  inherently  wrong,  and  I  am  glad  that 
our  present  Postmaster  General,  unlike  Mr.  Lewis,  has  had  the  dis- 
cernment to  temper  and  qualify  the  "public  service  motive"  as  he  did 
in  his  last  annual  report,  when  he  brought  out  the  fact  that  the  experi- 
ment of  free  mail  delivery  in  villages  had  been  abandoned,  because  he 
found  that  more  just  and  equitable  results  could  be  obtained  by  having 
the  people  call  for  their  own  mail,  rather  than  having  the  underpaid 
carriers  bring  it  to  them.  On  page  34  of  his  last  annual  report,  the 
Postmaster  General  says: 

"The  results  attained  during  the  year  are  believed  not  to  warrant  the  con- 
tinuance or  extension  of  village  delivery.  There  is  no  such  need  or  demand 
for  free  delivery  of  mail  in  small  towns  and  villages  as  there  is  in  cities  and 
rural  districts,  and  its  establishment  does  not  occasion  any  appreciable  increase 
in  the  use  of  the  mails.  An  economical  administration  of  such  a  service  would 
require  the  limiting  of  delivery  in  nearly  every  instance  to  one  a  day  and  the 
employment  of  carriers  at  salaries  lower  than  those  paid  to  city  and  rural 
carriers.  Such  service  is  regarded  as  inferior  by  the  patrons,  who  in  such  com- 
munities live  near  the  post  office  and  are  in  the  habit  of  calling  two  or  three 
times  a  day  for  their  mail.  The  low  salaries  of  the  carriers,  moreover,  would 
not  conduce  to  efficient  service." 

Public  Insured  Proper  Treatment  by  Regulation 

On  the  other  hand,  the  so-called  commercial  motive,  in  its  narrow- 
est sense — in  the  sense  that  it  looks  merely  to  the  immediate  profit  and 
disregards  those  considerations  of  public  service  which  make  for  per- 
manency and  secure  the  establishment  of  good  will — is  equally  wrong. 
We,  and  all  other  progressive  concerns,  have  long  since  learned  that 
our  most  valuable  asset  is  not  an  immediate  and  excessive  profit,  dic- 
tated by  any  narrow  or  selfish  policy  to  which  Mr.  Lewis  refers  in  his 
exposition  of  the  "private  service  motive,"  but  a  continuous  fair  profit, 
and  a  contented  public.  A  significant  factor,  however,  which  Mr. 
Lewis,  in  all  his  remarks,  seems  to  have  ignored,  is  that  the  public 
itself  has  recognized  this  principle,  and,  instead  of  leaving  it  to  the 
good  sense  of  the  corporation  to  enforce  it,  has  enforced  the  principle 
itself;  has  instituted  a  system  of  proper  public  regulation  of  utilities, 
to  the  end  that  there  may  be  a  blending  of  the  "public  service  motive" 
with  the  "private  service  motive,"  whereby  the  best  results  can  be  and 
have  been  most  happily  obtained.     The  public  has  taken  up,  if  you 


please,  that  principle  which  Mr.  Adams  pronounced  way  back  in  1887, 
and  which  Mr.  Lewis  appears  to  have  only  just  discovered,  and  has 
said  that  these  large  institutions  that  serve  the  public  must  not  be  left 
unregulated.  The  public  has  not  taken  it  up  as  a  measure  of  ill-will 
toward  the  companies,  nor  as  any  evidence  of  a  crjdng  necessity,  but 
with  the  idea  of  equal  protection  to  public  and  public  utility  alike.  It 
said,  in  substance,  "We  are  going  to  protect  the  utilities  in  the  exercise 
of  their  functions,  so  long  as  they  properly  serve  the  public."  In  prac- 
tically every  State  of  the  Union  to-day,  we  have  these  regulative  bodies 
as  a  part  of  the  fundamental  law.  As  an  instance  of  protection  to  the 
utility,  you  have  got  to  prove  "public  necessity"  to  the  Commission, 
before  you  can  enter  a  field  already  served,  in  the  proper  meaning  of 
the  word.  As  an  instance  of  protection  to  the  public,  you  have  the 
Interstate  Commerce  Commission,  with  its  tremendous  power,  illustra- 
ted to-day  in  its  control  of  the  railroad  situation,  with  the  railroads 
appealing  for  an  increase  in  rates — not  a  cent  of  which  can  be  granted 
without  the  approval  of  the  Commission. 

Now,  I  say  that  the  public  has  taken  this  matter  in  hand,  and 
decided  that  these  public  regulative  bodies  shall  first  be  considered 
and  consulted,  before  the  utility  can  take  any  step  affecting  the  rights 
of  the  public.  They  can  be  made  use  of  by  every  citizen.  There  is 
absolutely  no  red  tape.  You  do  not  have  to  employ  an  attorney.  You 
write  a  letter  and  get  a  hearing.  And  that  is  all  there  is  to  it.  The 
Commission  sits  as  a  public  tribunal  and  metes  out  justice  in  exact  pro- 
portion as  is  merited  by  the  complaint. 

So  that,  in  all  this  talk  about  "public  service  motive"  and  "private 
service  motive,"  we  must  remember  that  the  public  has  recognized,  and 
has  enacted  into  its  fundamental  laws,  the  principle  that  a  "public  serv- 
ice motive"  which  runs  counter  to  good  business  sense,  which  ignores 
questions  of  price  and  cost,  (without  which  you  cannot  determine  how 
efficiently  and  economically  your  property  is  operated),  is  just  as  wrong 
as  the  "private  service  motive,"  which  recognizes  immediate  profit, 
and  that  alone. 

Furthermore,  we  have  something  to-day  that  I  am  glad  we  have, 
and  that  is  potential  competition,  and  it  is  something  that  the  people 
want,  and  must  retain,  because  I  can  conceive  how  there  may  come  a 
time  when  a  utility,  governmental  or  private,  by  reason  of  a  change  in 
personnel,  may  lose  public  support  and  confidence.  In  such  a  case, 
under  our  present  laws  as  they  stand  to-day,  the  public  has  recourse  to 
the  ever  present  competition  which  may  be  changed  to  actual  competi- 
tion when  the  community  feels  that  matters  have  come  to  such  a  pass 
as  to  make  such  a  change  desirable,  and  this  potential  competition  is 
one  of  the  strongest  weapons  which  the  public  has  to  defend  itself 
against  any  such  emergencies  as  may  arise  in  the  course  of  time. 

Regulation  Should  Be  Given  Fair  Trial 

Now,  the  only  way  Mr.  Lewis  or  any  one  else  can  ignore  this 
question,  is  by  saying,  fundamentally,  that  regulation  has  proven  a 
failure.    And  how  can  any  man  in  this  country,  with  regulation  prac- 

6 


tically  a  new  thing,  take  that  stand?  To  adopt  this  stand,  one  must 
entirely  ignore  the  present  tendency  of  our  administration ;  must  say 
that  all  the  efforts  now  being  directed  by  the  public  in  improving  and 
strengthening  our  machinery  of  public  regulation  are  purely  so  much 
wasted  effort ;  that  Congress,  itself,  is  wasting  the  public  funds  upon 
a  fruitless  task  in  its  work,  begun  a  short  time  ago,  through  the  Inter- 
State  Commerce  Commission,  of  undertaking  the  valuation  of  all  tele- 
phone and  telegraph  companies  in  this  country, — a  task  which  the 
Commission  is  now  engaged  upon,  and  for  which  a  great  deal  of  time 
must  necessarily  be  expended.  To  take  such  a  stand,  one  must  be 
ready  to  condemn  the  whole  scheme  of  public  regulation  at  its  very 
inception ;  declare  that,  although  in  its  formative  stage,  it  has  failed  in 
its  mission.  That  is  something  I  cannot  understand.  Mr.  Lewis  knows 
that  in  his  own  home  State,  the  Public  Service  Commission  is  to-day 
engaged  in  a  state-wide  rate  investigation,  to  determine  upon  the  pro- 
priety of  the  scheme  of  state-wide  telephone  rates,  and  that  the  same 
is  being  done  in  the  State  of  Pennsylvania,  and  elsewhere,  and  that  an 
honest  effort  is  being  made,  with  the  cooperation  of  the  Telephone 
Company  and  the  Public  Service  Commission,  to  determine  upon  a  fair 
valuation,  and  to  reach  an  adjudication  of  what  is  a  proper  and  reason- 
able rate  for  reasonable  service.  On  the  part  of  the  Company  there  is 
nothing  but  an  honest  effort  to  submit  to  a  question  of  justice,  nothing 
but  the  laying  of  the  cards  on  the  table  so  that  the  public  may  see  and 
judge,  and,  on  the  part  of  the  Commission  there  is  nothing  but  a  pains- 
taking and  scientific  effort  to  base  action  upon  knowledge,  and  knowl- 
edge alone.    Will  Mr.  Lewis  say  that  all  this  is  idle  and  fruitless? 


Complete  Unregulated  Monopoly  Proposed  by  Mr.  Lewis 

But  if  we  change  all  this — change  our  fundamental  and  painstak- 
ingly worked  out  plan,  which  the  public,  in  its  wisdom  has  set  up — 
where  do  we  land?  We  not  only  lose  this  scheme  of  control  and  regu- 
lation— but  see  what  we  substitute.  Not  long  ago,  the  Attorney  Gen- 
eral, with  a  great  deal  of  pride,  pried  apart  the  telephone  and  the  tele- 
graph on  the  sole  assumption  that  those  two  were  competitive  services, 
and  should  not  be  under  one  head.  This  cost  the  American  Telephone 
and  Telegraph  Company  a  good  deal,  but,  as  decent  citizens,  we  obeyed 
the  order  without  protest.  We  separated.  And  the  President  of  the 
United  States  came  out  in  a  hearty  public  commendation  of  this  action. 
Now  comes  our  friend  Mr.  Lewis  and  seeks,  not  only  to  re-unite  the 
telephone  and  the  telegraph  into  one  agency,  but  to  amalgamate  the  two 
with  the  postal  service,  so  that  the  three  agencies,  which,  according  to 
the  views  of  the  administration,  are  to-day  in  a  measure  competing — 
and  I  might  say  competing  in  the  sense  that  to-day  you  have  the  choice 
open  to  you  to  send  your  communication  by  first-class  mail,  telegram 
or  telephone,  as  you  please — these  three  conveniences  are  to  be  lumped 
together  into  one  service,  and  what  was  wrong  on  the  part  of  private 
companies,  is  to  become  right  on  the  part  of  the  Government.  You  are 
to  have  absolutely  no  chance  for  protest  or  appeal  to  commissions  or 


courts.  If  you  are  dissatisfied  with  the  mail  and  want  to  use  the  tele- 
gram, you  go  to  the  Government ;  if  you  are  dissatisfied  with  the  tele- 
gram, and  want  to  use  the  telephone,  you  go  to  the  Government ;  and 
if  a  condition  of  public  service  arises  where,  from  a  series  of  accumu- 
lated abuses,  the  public  is  seeking  relief,  nothing  short  of  a  political 
revolution  will  secure  the  necessary  attention. 


Deliver  Us  From  Politics 

Gentlemen,  I  have  worked  for  many  years  in  telephoning,  and  I  have 
never  yet  had  my  "boss"  ask  me  what  my  party  was  or  which  way  I 
intended  to  vote.  I  tell  you  it  is  a  serious  matter  if  we  are  to  add  to 
the  many  questions  before  the  public  to-day,  such  as  the  monopoly 
question,  the  tariff  question,  the  money  question,  and  many  others,  on 
top  of  them  the  question  of  local  telephone  service— of  your  telephone 
service,  for  instance,  here  in  Providence.  So  that  you  find  yourself  in 
a  situation,  say,  where,  if  the  man  whom  you  have  sent  to  Washington 
to  represent  you  because  he  stands  for  all  you  hold  dear  on  questions 
of  tariff,  does  not  happen  to  suit  on  the  post  office  and  telephone  propo- 
sition, you  have  just  got  to  take  the  telephone  and  let  the  tariff  go,  or 
take  the  tariff  and  let  the  telephone  go.  To  say  the  least,  this  is  an 
exigency  which  may  arise  if  the  Government  of  the  United  States 
claims  a  monopoly  on  all  means  of  communication. 


Present  Conditions  Right 

Now  I  say  that,  in  the  face  of  present  conditions,  Mr.  Lewis  and 
everybody  else  must  acknowledge  that  rates  in  this  country  and  con- 
ditions of  telephone  service  are  right.  If  they  are  not  right,  he  has 
access  to  the  Interstate  Commerce  Commission,  and  practically  every 
State  commission  in  the  country,  to  see  that  they  are  made  right.  This 
is  not  merely  his  privilege,  it  is  his  duty  as  a  citizen  and  it  is  anybody's 
duty  that  has  any  complaint  against  telephone  rates  or  telephone  serv- 
ice, to  go  before  the  Commission  to  secure  a  proper  determination  of 
the  matter.  So  I  say  I  do  not  care  what  comparison  Mr.  Lewis  makes 
as  to  foreign  rates,  the  rates  here  should  be  assumed  to  be  right  until 
otherwise  determined.  They  have  been  filed  with  the  Commission  by 
the  Company,  and  the  Company  stands  ready  to-day  to  meet  any  criti- 
cism manfully  and  fairly  and  to  make  or  accept  any  change  or  pro- 
vision that  is  proven  just  and  reasonable.  Now,  gentlemen,  remember 
that  in  your  public  service  regulation  you  have  been  clean,  fair  and 
decent.  You  have  insisted  that  whatever  action  is  taken  shall  be  taken 
only  upon  thorough  investigation,  to  the  end  that  no  action  shall  be 
taken  except  as  it  is  preceded  by  exact  knowledge.  You  have  said  that 
our  earnings  shall  not  be  based  on  water,  on  error,  mistake,  on  ineffi- 
cient management  or  excessive  cost,  but  that  they  shall  be  based  upon 
the  fair  value  of  the  property  used  and  useful  in  the  service.  Can  any 
one  claim  a  basis  fairer  than  that  for  rate  making? 

8 


Public  Approve  Service 

Not  only  are  telephone  rates  and  conditions  of  service  as  they 
should  be,  sanctioned  by  the  public,  through  its  regularly  constituted 
public  service  tribunals,  but  the  public  has  shown,  by  the  best  test 
possible — the  use  of  the  service — the  extent  to  which  the  telephone 
service  has  met  with  its  approval.  I  mean  by  this  that  when  it  comes  to 
development,  the  United  States  is  so  far  in  the  lead  over  countries 
where  government  ownership  obtains,  that  comparisons  of  telephone 
development  are  almost  laughable.  You  will  remember  very  clearly 
that  Mr.  Lewis  made  the  statement  just  before  he  sat  down  that  it  was 
our  great  and  noble  general,  Theodore  N.  Vail,  who  laid  down  the 
slogan  for  his  army  to  follow,  that  he  would  not  rest  content  with  the 
development  of  our  telephone  service  until  there  was  a  telephone  in 
every  man's  house.  That  was  the  slogan  of  our  system  long  ago ;  that 
is  the  goal  we  have  been  trying  to  reach  for  years.  That  is  to-day  our 
aim,  and  I  propose  to  show  you  that  we  have  come  nearer  to  this  goal 
than  any  other  country-  on  the  face  of  the  earth. 

United  States  Telephone  Center  of  World 

There  are,  to-day,  in  this  country,  upwards  of  9,000,000  telephones. 
The  United  States,  with  less  than  6%  of  the  world's  population,  has 
more  than  65%  of  the  world's  telephone  development.  Europe,  with 
four  times  the  population  of  the  United  States,  has  less  than  one-half 
the  number  of  telephones.  Not  so  bad,  Mr.  Lewis,  for  private  enter- 
prise. 

The  United  States,  according  to  the  census  just  published,  has  nine 
telephones  per  hundred  inhabitants,  and  has  gained,  during  the  last 
year,  nearly  as  many  stations  as  Great  Britain  has  to-day  in  its  entire 
system.  Great  Britain,  by  the  way,  has  V/2  telephones  per  hundred 
inhabitants,  or  one-sixth  of  our  telephone  development.  Germany  has 
two  telephones  per  hundred  inhabitants ;  Netherlands  two  telephones 
per  hundred  inhabitants ;  Switzerland  two  telephones  per  hundred ; 
Belgium  four-fifths  of  a  telephone  per  hundred ;  France  four-sixths  of 
a  telephone  per  hundred.  The  entire  country  of  France  has  about  the 
same  number  of  telephones  as  we  have  in  New  York  City  alone.  Not 
so  bad,  Mr.  Lewis,  for  private  enterprise. 

United  States  Service  Diversified 

And,  mind  you,  this  development  has  not  been  obtained  by  skim- 
ming the  cream  off  the  milk,  as  has  been  done  by  governments  in  the 
foreign  countries,  under  the  "public  service  motive."  Let  me  show  you 
how  we,  actuated,  as  Mr.  Lewis  would  say,  by  the  modern  "private  serv- 
ice motive,"  have  taken  care  of  the  outlying  and  rural  districts,  as  well 
as  our  big  cities.  There  is  a  gentleman  with  me  here  to-night  who 
formerly  worked  in  Indianapolis,  and  who,  years  ago,  tramped  through 
Indiana,  and  his  sole  mission  was  to  open  up  outlying  sections  and  to 
establish  rural  telephone  business  long  before  the  Post  Office  Depart- 
ment thought  these  sections  worthy  of  rural  mail  routes.    And,  mark 

9 


this,  Mr.  Lewis,  in  the  United  States,  with  our  so-called  "private  serv- 
ice motive,"  19^%  of  our  exchanges  have  from  50  to  100  stations; 
25.8%  have  from  100  to  200  stations,  and  13.1%  have  from  200  to  300 
stations.  In  other  words,  about  60%  of  our  telephone  development  is 
to  be  found  in  exchanges  of  300  stations  or  less.  Compare  this,  if  you 
will,  with  the  urban  and  rural  development  of  foreign  governmental 
telephone  systems,  where  the  average  rural  development  represents  but 
21.2%  of  the  corresponding  urban  development.  How  about  this,  Mr. 
Lewis,  as  an  example  of  your  "public  service  motive?"  Why,  in  our 
State  of  Iowa,  which  is  highly  rural,  the  density  of  development  is 
greater  than  in  any  other  part  of  the  United  States.  How  about  this, 
Mr.  Lewis,  as  an  example  of  your  "private  service  motive?" 

Universal  Service  Slogan 

Now  we  have  been  accused — not  by  Mr.  Lewis,  I  am  glad  to  say, 
but  by  some  of  his  friends — that  we  have  been  remiss  in  connecting 
with  other  companies.  I  want  to  say  that  for  fifteen  years  I  have  been 
out  making  connecting  contracts  with  other  companies,  and  now,  as  a 
part  of  our  scheme  of  universal  service,  which  some  thoughtless  people 
have  mistaken  for  monoply — which  we  have  never  desired — I  say  we 
connect  with  nearly  3,000,000  stations  operated  independently  and  not 
controlled  by  the  Bell  Company.  We  have  been  striving,  as  I  say,  for 
universal  service,  not  universal  ownership.  The  song  Mr.  Vail  has 
sung  from  the  start  has  been  "universal  service ;"  in  other  words,  one 
system,  the  idea  being  that  every  telephone  in  the  United  States  may 
be  the  center  of  a  system,  and  that  isolation  shall  be  wiped  out  as 
rapidly  as  is  humanly  possible.  Through  the  aid  of  our  friend,  the 
Attorney  General,  this  movement,  in  the  direction  of  one  complete 
system  of  universal  service,  has  received  a  new  impetus  by  the  new 
arrangement  agreed  upon  for  connection  with  the  so-called  competitive 
exchanges.  We  shall  soon,  therefore,  realize  the  grand  spectacle  of  one 
system  with  universal  service  to  more  than  nine  millions  of  telephones. 
Not  so  bad  for  private  enterprise. 

Relative  Use  of  Telephone  a  Good  Test 

Now  with  nine  million  telephones  in  service  in  this  country,  Mr. 
Lewis  will  have  to  admit  that  we  have  a  pretty  fair  basis  of  comparison 
with  foreign  countries,  and  I  am  afraid  Mr.  Lewis  would  find  it  rather 
hard  to  fit  this  condition  into  his  theories  of  "public  service  motive" 
and  "private  service  motive."  But  this  is  not  all :  you  can  talk  as  much 
as  you  please  about  figures  and  foreign  lands,  but  there  is  one  com- 
parison which,  to  me,  seems  very  significant : — when  considering  first- 
class  mail  matter,  telephones,  and  telegraphs  as  alternative  means  of 
communication  in  Europe,  what  ilo  we  find  ?  We  find  that  in  Europe 
71.2%  of  all  such  communication  travels  by  mail.  The  corresponding 
figure  in  the  United  States  where  coiii|>ctitive  conditions  prevail,  is 
39.4%  by  first-class  mail.  And  when  we  come  to  the  telephone,  we 
find  that  of  the  total  communications  in  Europe,  27 .2)%  go  by  telephone. 
In  the  United  States  the  percentage  of  total  communications  that  go  by 

10 


telephone  is  60.2%.  Not  so  bad,  Mr.  Lewis,  for  the  poor  despised 
"private  service  motive"  telephone.  After  all,  Mr.  Lewis,  it  is  service 
that  counts ;  not  theories.  The  proof  of  the  pudding  is  in  the  eating — 
is  it  not,  Mr.  Lewis? 

There  is  one  more  point  about  Mr.  Lewis'  theory  of  "public  service 
motive"  and  "private  service  motive"  that  I  should  like  to  touch  upon, 
if  I  had  time,  and  that  is  Mr.  Lewis'  example  of  the  Chicago  and  Mil- 
waukee rate  case.  I  am  rather  surprised  that  Mr.  Lewis  should  have 
mentioned  this  case  again,  in  view  of  the  fact  that  he  must  have  seen 
how  utterly  unfair  this  example  was,  if  he  read  the  last  annual  report 
of  President  Vail.  Here  is  the  true  story,  as  it  appeared  in  President 
Vail's  last  annual  report,  of  The  Chicago  &  Milwaukee  Telegraph  Line, 
which  Mr.  Lewis  picked  out  as  an  example  of  the  viciousness  of  the 
"private  service  motive" : 

"The  Chicago  &  Milwaukee  telegraph  has  been  set  up  as  an  example  of  the 
evils  of  private  operation.  Why  this  single  line  of  some  fifty  miles  in  length 
should  have  been  selected  is  difficult  to  understand.  Any  line  situated  under 
such  favorable  conditions,  doing  business  only  between  two  large  cities,  should 
and  could  be  operated  at  rates  which  could  not  apply  to  lines  or  systems  which 
take  business  from  and  to  all  points,  white  the  peculiar  conditions  under  which 
this  particular  line  operated  put  it  absolutely  outside  of  comparison  whether 
with  other  lines  or  with  any  system.  The  history  of  this  company  is  well 
known,  and  if  not  known  to  those  who  have  used  it  as  an  illustration,  it  could 
have  been  obtained  with  little  eflfort. 

"Built  in  1878  by  some  linemen  as  a  speculation,  it  was  sold  to  some  mem- 
bers of  the  boards  of  trade  of  Chicago  and  Milwaukee  and  incorporated  with 
a  stock  of  $50,000.  Fhe  business  of  this  line  was  confined  almost  exclusively 
to  messages  from  floor  to  floor  of  the  two  boards,  to  news  service  and  to  leas- 
ing private  lines.  While  it  accepted  other  service,  it  had  no  organisation  to, 
and  did  not  deliver  or  collect  messages  except  by  telephone.  The  company  ap- 
parently made  large  profits,  but  it  must  have  been  at  the  expense  of  mainte- 
nance and  depreciation,  for  later  on  the  company  was  reorganized  with  a  capi- 
tal stock  of  150,000  and  $50,000  of  bonds,  and  the  lines  reconstructed.  This 
new  company  operated  until  1905,  when  it  ivent  into  receivership  and  the  lines 
were  operated  by  the  receiver  until  1907,  when  it  was  offered  for  sale,  and  the 
Chicago  and  the  Wisconsin  Telephone  Companies  needing  additional  lines,  pur- 
chased it  in  connection  with  the  American  Telephone  and  Telegraph  Company, 
for  toll  and  long-distance  business.  This  was  five  years  before  an  interest  in 
the  Western  Union  was  acquired  or  contemplated. 

"The  lines  are  now  used  for  telephone  business  principally.  The  commer- 
cial experience  and  history  of  this  line  are  not  such  as  make  it  a  good  argument 
for  lower  telegraph  rates,  either  under  private  or  government  operation,  and 
even  under  such  favorable  auspices  its  experience  was  certainly  not  such  as 
would  encourage  private  enterprise  in  another  attempt,  although  the  field  is 
open  to  all." 

Not  Yet  Through  Growing 

Now  we  have  been  accused  of  having  reached  the  zenith  of  our 
development ;  that  under  private  ownership  we  won't  go  any  further. 
I  want  to  say  to  Mr.  Lewis  that  we  are  only  beginning  to  unfold  the 
possibilities  of  our  development.  Last  year  we  expended  on  the  Bell 
System  $55,000,000  for  additions  to  plant ;  this  year  our  budget  calls 
for  $60,000,000.  And  we  are  going  to  keep  right  on  developing,  going 
forward,  if  only  the  public  will  let  us  by  continuing  their  encourage- 
ment. 

II 


Lewis  Figures  Analyzed 

And  now  as  to  the  comparisons  of  efficiency  and  rates  which  Mr. 
Lewis  has  made.  You  yourselves  know  how  easy  it  is  to  prove  any- 
thing by  stretching  statistics  this  way  or  that.  Figures  are  rather  dry 
at  best,  but  I  want  to  say  for  your  information  that  we  have  compiled 
a  study  of  the  comparisons  which  Mr.  Lewis  has  made  as  to  efficiency 
and  rates  between  the  United  States  and  foreign  countries.  If  you  care 
to,  you  can  obtain  copies  of  this  at  the  close  of  this  discussion.  You 
will  see,  I  think,  how  misleading  and  unwarranted  are  the  statistics 
which  Mr.  Lewis  has  presented,  and  upon  which  he  has  attempted  to 
make  his  case  for  Government  Ownership ;  you  will  see  how  artificial 
and  unreliable  is  the  fabric  of  statistics  which  has  been  constructed,  and 
you  will  find  that  our  exposition  of  this  fact  is  not  merely  controversial, 
but  is  based  upon  official  information  of  the  highest  sort,  and  this  in- 
formation is  not  only  cited  in  each  case  in  this  study,  but  we  are  ready 
to  have  anyone  who  desires,  including  Mr.  Lewis,  verify  the  informa- 
tion by  recourse  to  our  files. 

Peculiar  Methods 

The  funny  thing  about  these  statistics  is,  that  the  method  Mr. 
Lewis  adopted  in  figuring  efficiency,  was  to  take  the  total  number  of 
messages  and  divide  that  by  the  total  number  of  employees  engaged 
in  each  service,  and  then  to  call  the  result  the  showing  of  efficiency 
on  the  part  of  the  service.  You  can  see  for  yourself  how  impos- 
sible such  a  method  is,  in  order  to  get  a  true  showing  for 
efficiency.  For  one  thing,  we,  in  this  country,  unlike  the  government 
systems  of  foreign  countries,  as  you  will  see  later,  are  constantly 
modernizing  our  plant,  and  looking  ahead  into  the  future,  and  by  this 
fact  alone  we  have  been  penalized  by  Mr.  Lewis'  efficiency  methods, 
because  we  have  a  lot  of  engineers  and  a  lot  of  men  constantly  en- 
gaged in  this  advance  construction.  Mr.  Lewis  had  no  difficulty  in 
picking  out  the  number  of  our  peoi)le  working,  and  he  said,  "We  will 
count  you  all."  I  suppose  if  we  had  dropped  this  large  force  of  men 
who  are  engaged  in  advance  construction,  who  are  engaged  in  work 
which  will  not  show  up,  perhaps,  for  years  to  come,  we  could  have 
shown,  according  to  Mr.  Lewis,  a  much  higher  "efficiency,"  because 
the  fewer  people  you  have  on  the  job,  the  higher  the  efficiency.  If  we 
could  cut  down  all  our  employees,  during  the  coming  year,  for  instance, 
who  are  not  engaged  directly  in  telephone  operating,  we  would  then, 
according  to  Mr.  Lewis,  show  a  marvelous  efficiency. 

But  when  Mr.  Lewis  came  to  foreign  countries,  he  found  a  pecu- 
liar situation.  If  you  will  look  at  the  report  which  was  prejiared  by 
the  Post  Office  Department  recently,  and  submitted  by  ^Ir.  Burleson 
to  Congress,  you  will  find  that  the  figures  for  foreign  telephone  and 
telegraph  and  post  office  systems  are  presented  with  barrels  of  salt, 
by  way  of  foot  notes,  and  these  foot  notes  practically  say,  in  eflTect,  that 
you  cannot  determine  anything  as  to  the  results  of  operation  or  the 
number  of  employees  in  the  service,  because  the  post  office  and  the  tele- 
graph and  the  telephone  are  operated  jointly,  and  their  results  cannot 

12 


be  shown  separately.  For  instance,  in  Norway,  most  of  the  telephone 
employees  also  perform  mail  and  telegraph  duties,  and  a  very  small 
portion  of  the  whole  are  engaged  solely  in  telephone  work.  Now  to 
give  you  an  idea  of  how  simple  Mr.  Lewis  found  the  job  of  measuring 
efficiency  under  such  circumstances — he  simply  took  the  total  number 
of  telephone  messages  for  Norway,  and  then  divided  that  by  the 
number  of  employees  who  did  telephone  work  exclusively — and  the 
result  purported  to  show  what  Government  Ownership  does  for  the 
people. 

Our  Economy  Shown  by  Construction  Cost 

Well,  gentlemen,  despite  the  fact  that  we  have  been  keeping  up  our 
plant  all  the  time,  that  we  have  been  engaged  in  advance  construction, 
far  into  the  future,  that  we  have  changed  from  the  grounded  to  the 
aerial  circuits,  and  from  the  aerial  to  the  underground  as  fast  as  we 
could,  and  that  we  have  not,  as  they  did  in  European  countries,  forced 
the  aid  of  municipalities  to  help  in  the  matter ;  despite  the  fact  that  we 
have  kept  in  advance  of  the  march  of  progress,  that  great  changes  have 
been  made  in  cable  construction,  cables  being  laid  underground  all  the 
way  from  Boston  to  Washington ;  despite  the  fact  that  we  could  not, 
like  foreign  countries,  confiscate  property  and  rights  of  way,  but  had  to 
pay  good  hard  dollars  for  them,  let  us  see  how  our  real  efficiency  shows 
up  in  the  way  of  costs  in  this  country,  including  all  the  long  distance, 
underground  and  spare  plant — because  we  have  a  good  bit  of  spare 
plant.  You  would  not  have  to  do,  for  instance,  as  they  do  in  Tokio, 
Japan,  where  there  are  20,000  poor  Japs  seeking  telephone  service,  who 
have  to  get  in  line  and  wait  their  turn  in  order  to  get  the  privilege  of 
subscribing  to  the  government  service,  and  who,  so  valuable  has  be- 
come the  right  to  the  first  positions  in  the  line,  are  trading  these  rights 
to  subscribe  for  telephone  service  on  the  stock  exchange  and,  in  some 
cases,  bequeathing  them  as  valuable  assets  in  their  wills.  For  you  see, 
Japan  has  no  money  at  present  for  telephones ;  she  needs  battleships — 
battleships  come  first  in  Japan.  But  as  I  say,  despite  all  this  prepared- 
ness of  the  telephone  in  this  country,  and  the  fact  that  we  have  attended 
to  telephone  needs,  present  and  future,  to  a  far  greater  extent  than  has 
been  possible  under  the  foreign  governmental  systems,  the  plant  of  the 
Bell  System,  the  American  Telephone  and  Telegraph  Company  and  its 
subsidiaries,  including  long  distance  lines,  stands  us  to-day  at  $153  per 
station.  Australia  stands  at  $163  per  station — $10  higher;  Germany, 
$178— $25  higher;  Switzeriand,  $192— $40  higher;  Hungary,  $193— 
$40  higher ;  Austria,  $213— $60  higher ;  France,  $253— $100  higher,  and 
Belgium,  $278 — $125  higher.  Not  so  bad,  Mr.  Lewis,  for  the  efficiency 
of  private  enterprise. 

Some  Exchange  Rate  Comparisons 

Now,  Mr.  Lewis  has  had  quite  a  bit  to  say  about  telephone  rates. 
The  question  of  rates  is  one  of  the  most  involved  and  technical  in  con- 
nection with  the  telephone  business.  I  have  already  shown  you  how  the 
public  has  dealt  with  the  telephone  in  regard  to  rates,  through  public 
service  regulation,  and  the  stand  we  have  taken  on  the  subject.    We 

13 


are  willing,  at  any  and  all  times,  to  change  our  rates  to  conform  to  any 
basis  demonstrated  by  investigation  to  be  more  reasonable  than  the 
present.  We  are  just  as  interested  in  a  proper  solution  of  this  question 
as  any  one,  and  I  submit  that  I  have  made  it  clear  that,  so  far  as  in- 
vestigation has  shown,  rates  in  this  country  are  as  they  should  be.  But 
now  what  sort  of  rate  comparisons  have  been  made  with  foreign  coun- 
tries? Well,  some  of  the  rate  statistics  used  by  Mr.  Lewis  came  from 
a  source  pretty  badly  tainted.  I  think  he  knows  what  I  mean.  And 
a  favorite  method  of  making  comparisons  is  to  take  a  big  city,  say  like 
New  York,  and  take  your  maximum  business  measured  rate,  and  then 
stick  that  up  on  your  flag  and  wave  it  around  as  the  New  York  rate, 
and  compare  that  rate  with  the  smallest  possible  rate  in  other  cities, 
and  then  talk  about  extortionate  and  unfair  rates.  Now  what  is  the  use 
of  comparing  rates  this  way?  It  is  not  fair;  it  is  not  honest,  because 
the  idea  is  not.  What  is  the  rate  for  one  particular  kind  of  service? 
but.  What  do  the  people  of  that  city  pay  for  telephone  service?  You 
have  got  to  take  into  account  not  only  the  size  of  the  exchanges,  but 
the  number  of  subscribers  using  the  service,  and  above  all  the  average 
rate  paid.  And  if  you  do  that,  you  find  some  such  comparisons  as  these : 

The  minimum  rate  in  The  Hague  is  $24.  In  San  Antonio,  Texas, 
an  exchange  of  about  the  same  size,  it  is  $18.  78%  of  the  San  Antonio 
subscribers  pay  not  more  than  the  minimum  rate  in  The  Hague,  and 
most  of  them  pay  less. 

The  Omaha,  Nebraska,  exchange  has  about  the  same  number  of 
subscribers  as  Tokio  (you  will  remember  Tokio).  79%  of  the  sub- 
scribers pay  less  than  the  minimum  rate  in  Tokio. 

Amsterdam,  Holland,  has  about  the  same  number  of  subscribers 
as  Rochester,  New  York.  77%  of  the  Rochester  subscribers  pay  less 
than  the  minimum  rate  in  Amsterdam. 

Rotterdam  has  about  the  same  number  of  subscribers  as  St.  Joseph, 
Missouri.  81%  of  the  St.  Joseph  subscribers  pay  less  than  the  mini- 
mum rate  available  in  Rotterdam. 

Budapest  has  about  the  same  number  of  subscribers  as  St.  Paul, 
Minnesota.  94%  of  the  St.  Paul  subscribers  pay  less  than  the  only 
rate  available  in  Budapest. 

Now  Paris  has  been  mentioned  and  compared,  for  example,  with 
New  York  City,  an  exchange  about  five  times  as  big,  and,  of  course, 
the  $228  rate,  the  highest  possible,  was  picked  out  for  New  York.  It 
doesn't  matter  that  only  %  to  yi  oi  \%  pay  the  rate  quoted  or  more, 
or  it  would  not  matter  if  nobody  paid  the  rate  quoted — use  it  just  the 
same,  because  it  sounds  bad  for  the  Bell.  Well,  now,  suppose  we 
compare  Paris  with  New  York.  The  only  rate  available  in  Paris  is 
$77.20 — and  don't  forget  you  have  got  to  buy  your  instrument  in 
addition.  79%  of  the  subscribers  in  New  York  City  pay  less  than  the 
Paris  rate.  90%  of  the  Philadelphia  subscribers,  and  91%  of  the 
Chicago  subscribers  pay  less  than  the  only  rate  available  in  Paris. 

Now  if  you  get  down  to  the  smaller  places  of  this  countrj-  and 
abroad,  you  would  find  practically  no  comparison.  The  foreign  rates 
are,  as  you  will  see  if  you  look  into  that  study  that  I  have  men- 
tioned to  you  before,  for  the  smaller  places,  much  higher  than  the 

14 


corresponding  rates  in  this  countn,-.  In  fact,  they  are  abroad,  in  many 
cases,  practically  prohibitive,  which  explains  the  impoverished  rural 
telephone  development  in  the  foreign  countries  which  have  govern- 
ment telephone  systems. 

Unfairness  of  Price  Comparisons  Without  Considering  Quality 

Now,  of  course,  I  have  not  told  you  the  whole  story  in  rate  com- 
parisons. What  good  are  rate  comparisons  if  you  do  not  consider  what 
you  get  for  your  money  ?  I  am  not  talking  now  about  the  quality  of 
service,  which,  as  anyone  knows  who  has  traveled  abroad,  is  for  the 
most  part  much  inferior  to  American  telephone  service.  I  am  talking 
now  about  the  length  of  hours  during  which  the  telephone  service  is 
available  to  the  public  abroad.  Take  Switzerland,  for  example — the 
country  with  which  Mr.  Lewis  is  so  in  love  for  statistical  purposes. 
96%  of  the  exchanges  in  Switzerland  close  at  9  o'clock  P.  M.  46% 
operate  from  7  A.  M.  to  noon;  then  close  two  hours  for  lunch;  then 
open  again  until  6  P.  M. ;  then  close  two  hours  for  tea ;  then,  to  show 
that  they  are  not  so  bad  after  all,  they  open  at  8  and  stay  open  until 
8:30  P.  M.,  then  put  up  the  shutters  for  the  night.  I  am  afraid  Provi- 
dence would  not  stand  for  that  kind  of  "public  service  motive." 

Or  take  New  Zealand,  where  the  Government  has  reduced  things 
to  so  beautiful  a  basis,  and  where,  incidentally,  they  have  a  debt  rate 
of  about  $400  per  capita ;  84%  of  all  their  telephone  exchanges  are  not 
open  on  Sundays ;  80%  are  not  open  on  holidays ;  and  60%  are  open 
on  week  days  only  from  9  A.  M.  to  5  P.  M. 

In  Belgium,  with  rates  averaging  $10  higher  than  the  Bell  Sys- 
tem, for  comparable  towns — in  what  is  known  as  the  Brussels  Group, 
which  includes  the  City  of  Brussels  and  environs,  and  contains  more 
than  one-third  of  all  the  telephones  in  the  country — out  of  a  total  of 
23  oflFices,  21  operate  only  from  7  A.  M.  to  9  P.  M.,  and  but  two  of  them 
operate  day  and  night. 

Plaintive  Appeals  from  Germany 

Or  listen  to  this  sad  plaint  from  one  of  the  official  representatives 
in  Germany,  Herr  Wendel,  in  his  speech  in  the  Reichstag,  in  February, 
1913: 

"I  cannot  forego  to  speak  here  about  the  wish  expressed  by  one  of  our 
Electoral  Districts.  I  refer  here  to  Freiburg.  There  the  entire  telephone  serv- 
ice is  interrupted  at  9  o'clock  P.  M.  Five  minutes  after  9  o'clock  it  is  impos- 
sible to  obtain  a  telephone  connection.  Now  the  Town  Council  of  Freiburg 
has  addressed  the  Postal  Administration  and  asked  for  the  introduction  of 
night  telephone  service.  The  Postal  Administration  has  refused  the  request. 
It  is  true  that  Freiburg  is  a  very  pretty,  idyllic,  and  quiet  town,  and  I  am  glad 
of  it;  moreover,  the  night  is  not  man's  friend.  I  admit  this;  but  it  must  also 
be  remembered  that  not  all  citizens  of  Freiburg  go  to  roost  with  the  chickens, 
and  a  sudden  sickness,  accident,  fire — any  kind  of  trouble — may  require  a  quick 
telephone  call  for  a  physician,  or  a  fire  brigade,  just  as  much  after  9  o'clock 
P.  M.  as  prior  to  that  time.  It  seems  to  me  indefensible  that  a  city  of  some 
30,000  inhabitants  should  be  deprived  of  telephone  service  at  9  P.  M.,  and  it  is 
the  duty  of  the  Postal  Administration  to  get  quickly  in  touch  with  the  Postal 
Direction  of  Freiburg  or  the  Upper  Postal  Direction  of  Dresden,  in  order  that 
this  justifiable  request  of  the  inhabitants  may  be  granted." 

15 


And  when  the  telephone  subscribers  of  Germany  became  so  unrea- 
sonable as  to  expect  telephone  service  during  lunch  hours,  here  is  the 
assurance  they  received  from  the  Secretary  of  the  Imperial  Postal 
Administration,  who  is  in  charge  of  the  service: 

"I  have  listened  to  the  wish  that  our  telephone  exchanges  should  also  be 
kept  open  during  the  noon  hours.  I  wish  to  state  that  the  various  authorities 
have  been  instructed  to  exert  themselves  along  this  line.  In  accordance  with 
the  reports  which  are  before  me,  I  can  state  that  70  per  cent,  of  all  our  tele- 
phone exchanges  give  service  between  12  A.  M.  and  1  P.  M." 

Toll  Rate  Comparisons 

Now  about  toll  rates.  Our  plant  in  this  country  is  built  and  oper- 
ated on  the  "No  delay"  basis.  Our  rates  in  this  country  cover  the  best 
service  only — we  have  no  different  kinds  of  service  as  they  have  abroad. 
Abroad  they  classify  rates  as  "urgent"  and  "ordinary."  By  "urgent" 
they  mean  something  like  the  long  distance  service  we  give  in  this 
country,  and  for  which  they  charge  from  two  to  three  times  as  much 
as  the  regular  rate  which  Mr.  Lewis  quoted.  We  have  only  one  kind  of 
long  distance  telephone  service,  and  that  is  the  best  that  we  know  how 
to  give.  This  "ordinary"  telephone  service  in  foreign  countries  is 
funny.  Say  you  live  in  Germany:  If  you  want  to  talk  with  a  friend, 
you  get  an  assignment.  They  tell  you  you  can  talk  with  him  at  10 
o'clock — perhaps  that  day,  perhaps  the  next  day,  if  the  appointments 
are  all  taken  up.  It  is  put  up  for  you  at  ten.  If  you  are  not  there  to 
talk,  you  are  charged.  If  you  are  there,  you  talk  three  minutes;  then 
you  are  cut  off,  and  you  cannot  talk  again  until  your  turn  comes  around 
again. 

And  then,  in  foreign  countries,  they  have  another  difTerence,  a 
vastly  important  one,  between  their  method  of  charging  and  our  meth- 
od of  charging  here  in  this  country.  Our  rates,  except  as  to  nearby 
points,  are  got  up  on  what  is  known  as  the  "particular  person"  basis. 
In  other  words,  if  you  want  a  long  distance  call,  except  to  nearby 
points,  you  are  charged  only  if  you  get  the  party  you  want.  This  is  not 
true  of  the  foreign  government  telephone  systems.  They  have  there 
what  is  known  as  the  "two  number"  basis — that  is,  they  give  you  the 
connection,  you  do  the  talking — if  you  can — and  whether  you  talk  to 
the  party  you  want,  or  the  office  boy,  or  the  janitor,  or  the  stenographer, 
or  to  no  one  at  all,  they  charge  you,  because  they  have  given  you  the 
connection.  They  sell  you  the  connection,  but  they  do  not  guarantee 
to  sell  you  the  conversation  you  want. 

Peculiar  Comparisons 

And  here's  another  point  about  the  rate  comparison  Mr.  Lewis  has 
made.  Unfortunately,  the  gentlemen  who  prepared  the  table  for  Mr. 
Lewis  took  the  one-hundred-niile  rate  as  the  magic  point,  and  then  pro- 
ceeded to  show  up  some  beautiful  discrepancies  between  our  rates  for 
long  distance  tcle])hone  service,  and  the  corresponding  rates  abroad. 
Well,  now,  it  is  a  fact  that  70%  to  80%  of  all  toll  traffic  moves  within 
a  radius  of  from  30  to  50  miles,  and  within  this  radius  it  is  found  that 

16 


our  toll  rates  are,  even  on  a  nominal  basis,  taking  into  account  the  dif- 
ferences I  have  mentioned,  lower  than  in  Europe,  and  if  you  consider 
the  international  toll  conversations  in  Europe,  of  which  there  are  many, 
and  which  Mr.  Lewis  completely  ignored,  you  find  that  the  foreign 
rates  are  from  three  to  four  times  as  high  as  the  rates  in  this  country 
for  corresponding  distances.  Now  when  you  get  out  into  much  longer 
distances,  I  grant  you  that  the  European  systems  can  quote  much  lower 
rates  for  the  service,  because  they  know  no  one  will  call  their  bluff.  The 
service  is  not  a  commercial  service,  and  even  if  some  one  should  take 
them  up,  they  could  afford  to  charge  almost  nothing  for  the  rare  conver- 
sation for  long  distances  if  they  could  charge  three  or  four  times  as 
much  for  the  short  distances  where  the  bulk  of  the  traffic  falls.  In 
European  countries  they  have  the  magnanimity  to  make  a  very  cheap 
rate  which  covers  long  and  short  distances,  and  you  get  the  short  occa- 
sionally, but  you  never  get  the  long.  It  is  true  that  to  distant  points  our 
rates  are  higher,  but  we  quote  rates  for  a  commercial  service,  and  we 
have  done  a  remarkable  thing  in  this  country  which  they  cannot  do  in 
European  countries ;  we  have  let  the  telegraph  take  its  natural  place. 
We  realize  that  for  short  distances  the  telegraph  cannot  compare  for 
direct  utility  with  the  telephone  service,  and  that  for  long  distances  the 
telegraph  cannot  be  approached  for  economy  by  the  telephone,  because 
of  the  terrific  cost  of  tying  up  lines.  When  you  have  a  property  costing 
several  hundred  thousand  dollars,  you  must  quote  a  rate  which  bears 
some  proportion  to  the  cost  of  furnishing  the  service.  But  we  have  an- 
other means  in  this  country  of  taking  care  of  this  kind  of  traffic — a 
thing  I  want  particularly  to  call  to  Mr.  Lewis'  attention :  We  do  not 
simply  sit  down  and  say  we  cannot  give  a  man  a  cheap  rate  for  long  dis- 
tances and  let  it  go  at  that,  but  we  have  these  lines  that  are  used  for 
long  distances,  and  we  lease  them  to  people  who  will  guarantee  a  fairly 
continuous  service,  or  who  will  take  the  service  for  a  half -hour  or  an 
hour  a  day,  and  we  quote  rates  that  will  move  traffic.  The  American 
Telephone  and  Telegraph  Company  has,  tied  up,  214,000  miles  of  line 
under  lease.  Now,  Mr.  Lewis,  what  have  you  done  with  these  lines? 
You  have  not  counted  one  message  on  them.  I  dare  say  you  do  not 
know  they  exist.  We  do  not  parade  them  ;  we  saw  no  need  of  parading 
them ;  we  did  not  need  to  make  any  defense  of  our  efficiency,  etc.,  until 
you  came  along  with  your  example  of  the  Norwegians  and  the  Luxem- 
burgers,  but  just  the  same,  we  keep  that  plant  in  repair,  we  furnish  the 
wires,  we  maintain  the  plant,  but  we  get  no  credit  for  it  in  your  show- 
ing of  efficiency.  We  are  interested  solely  in  giving  service;  and  if  we 
give  the  service,  we  are  satisfied  to  let  it  go  at  that. 

Europe  an  Armed  Camp 

Now,  Mr.  Lewis  was  kind  enough,  in  his  remarks  in  Congress, 
to  make  a  statement  that,  I  think,  goes  far  to  explain  the  situation. 
European  governments  never  took  over  the  telephone  because  they 
could  do  the  job  better;  on  the  contrary,  the  people  who  were  running 
the  telephone  service  were  doing  the  job  so  well  that  if  the  govern- 
ments had  not  taken  the  service  over,  and  stopped  competition  with  the 

17 


telegraph  service  which  the  governments  had  from  the  start,  they  would 
have  gone  bankrupt,  and  Mr.  Lewis  knows  that  that  is  true.  We 
know  that  Europe  is  one  armed  military  camp ;  we  know  that  when  the 
telegraph  came  in  under  the  Governments  in  Europe,  it  was  not  as  a 
commercial  service,  but  as  a  military  agency.  For  the  European  Gov- 
ernments, the  one  overwhelming  purpose  is  military  necessity  and  pro- 
tection. Now  we  have  not  this  situation  here.  Our  country,  fortu- 
nately, is  not  an  armed  camp. 

Prof.  Holcombe's  Caution 

One  other  thing  about  the  statistics  that  Mr.  Lewis  has  used.  Mr. 
Lewis  has  mentioned  Professor  Holcombe's  book  on  telephones  in 
such  a  way  as  to  lead  one  to  believe  that  Professor  Holcombe  and  Mr. 
Lewis  are  in  accord  on  the  foreign  telephone  statistics  which  Mr. 
Lewis  has  used.  Let  me  quote  you  this  from  Chapter  23,  Page  420,  of 
Professor  Holcombe's  book  on  "Public  Ownership  of  Telephones": 

"'A  judicious  man,'  says  Carlyle's  'crabbed  satirist,'  'looks  at  Statistics, 
not  to  get  knowledge,  but  to  save  himself  from  having  ignorance  foisted  upon 
him.'  Statistics  have  improved  somewhat  since  Carlyle's  day.  Those  published 
by  the  International  Bureau  of  Telegraph  Administrations  at  Berne,  Switzer- 
land, are  carefully  compiled  and  edited.  Yet  they  are  no  better  than  their 
source,  the  reports  of  the  various  governmental  administrations.  A  judicious 
man  will  still  be  careful  what  he  tries  to  prove  by  them." 

And  while  we  are  on  the  subject  of  toll  rates,  I  want  to  remind 
you  that  in  many  of  the  countries  abroad,  the  governments  refused  ab- 
solutely to  build  toll  lines  until  the  returns  on  these  lines  were  guar- 
anteed by  the  local  authorities  in  the  cities  and  villages  through  which 
the  lines  were  to  be  constructed,  so  that,  in  many  cases,  the  toll  rates 
charged  by  the  governments  do  not  represent  the  actual  charges,  but 
have  been  supplemented  by  the  guarantees  required  by  the  authorities. 
For  instance,  I  wonder  if  Mr.  Lewis  has  seen  this  in  Professor  Hol- 
combe's book  with  regard  to  Switzerland : 

"After  another  five  years  of  more  or  less  constant  negotiations  with  the 
commercial  interests  north  of  the  Alps,  they  undertook  to  give  on  their  own 
sole  responsibility  the  required  guarantee.  In  1900,  a  line  was  opened  between 
Lugano  and  Zurich,  and  a  second  between  Bellinzona  and  Lucerne. 

"During  the  first  year  after  their  opening,  the  traffic  over  these  two  lines 
averaged  only  thirteen  messages  a  day.  Consequently,  the  receipts  amounted 
only  to  a  bare  third  of  the  guaranteed  income,  and  the  real  cost  of  the  connec- 
tion to  the  interests  which  had  demanded  it  was  nearly  thrice  the  nominal  rate. 
Yet  the  guarantee  did  not  suffice  to  cover  the  costs  to  the  administration,  for 
the  construction  over  the  Alps  proved  to  be  exceptionally  expensive." 

The  same  condition  prevails  in  France,  where  the  actual  financ- 
ing of  the  long  distance  telephone  lines  had  to  be  undertaken  by  local 
authorities,  and  sometimes  by  the  private  interests  in  these  localities,  in 
addition  to  the  guarantees  which  were  required  in  return  for  the  in- 
vestment. That  is  one  of  the  ways  that  the  foreign  government  tele- 
phone systems  (operating,  no  doubt,  in  response  to  Mr.  Lewis'  law  of 
"public  service  motive")  discouraged  the  building  of  lines  to  what  they 
thought  might  not  be  profitable  sections 

V8 


Toll  Line  Delays  Abroad 

Now  then,  after  all  I  have  said  about  telephone  toll  rates,  what 
kind  of  service  do  you  get  for  your  money  ?  I  wish  I  had  time  to  give 
you  some  adequate  indication  of  the  almost  universal  dissatisfaction 
in  Europe  with  the  kind  of  toll  service  that  the  governments  furnish. 
I  wUl  mention  one  or  two  instances — I  am  not  exaggerating  these  in 
the  slightest — I  am  going  to  quote  to  you  from  official  sources.  Here, 
for  instance,  is  a  quotation  from  the  speech  of  Herr  Haberland  of  the 
German  Reichstag: 

"Thus,  complaint  is  made  of  the  long  time  that  a  subscriber  must  wait  in 
order  to  get  long  distance  connections,  especially  connections  between  the  West 
and  the  more  central  parts  of  the  country,  and  in  particular  between  Dussel- 
dorf  and  Berlin.  For  years  the  Imperial  Post  Office  has  been  acquainted  with 
these  complaints.  In  1907  the  Dusseldorf  Chamber  of  Commerce  made  an  in- 
vestigation and  found  that  the  waiting  time  exceeded  two  hours.  In  1910  it 
was  proved  that  the  average  time  of  waiting  to  be  connected  by  telephone  serv- 
ice between  Dusseldorf  and  Berlin  (about  400  miles)  was  still  over  one  hour, 
and  the  average  time  between  Dusseldorf  and  Mannheim,  Dortmund,  and 
Cologne  was  forty-four,  thirty-nine  and  thirty-four  minutes  respectively. 
Later,  conditions  again  grew  worse.  The  average  time  required  to  get  a  con- 
nection with  Berlin  is  now  one  and  one-half  hours.  According  to  reports  from 
a  number  of  firms,  if  the  operator  be  requested  to  get  Berlin,  the  general  reply 
is  that  unless  the  conversation  is  classified  as  'Urgent,'  the  connection  will  take 
several  hours.  In  fact,  the  Administration  recommends  a  scheme  of  'Urgent' 
conversations  to  overcome  the  trouble.  This  remedy,  however,  is  often  too  ex- 
pensive for  the  less  wealthy  concerns,  and,  f urthe'  more,  it  is  to  be  remembered 
that  this  forced  increase  in  urgent  conversations  tends  to  make  the  waiting- 
time  still  longer  in  the  case  of  ordinary  conversations." 

The  toll  service  in  France  is  even  more  ridiculous.  I  quote  from 
a  few  of  the  many  complaints  of  the  French  Chambers  of  Commerce: 

Chamber  of  Commerce  of  Alois  (population  2^,000): 

"As  regards  telephone  communications,  for  example,  several  establish- 
ments have  indicated  that  it  has  been  impossible  to  obtain  connections  with 
Marseilles  (85  miles)  and  Lyons  (115  miles),  even  after  waiting  four  hours." 
Chamber  of  Commerce  of  Rouen  (population  l2S,ooo): 

"We  place  in  the  first  rank  the  reforms  which  we  wish  for  the  improve- 
ment of  the  telegraph  service,  and  especially  in  the  telephone  service  which 
leaves  much  to  be  desired.    It  takes  an  average  of  55  minutes  to  secure  a  con- 
nection with  Paris   (70  miles)." 
Chamber  of  Commerce  of  Chambery  (population  33,000): 

"Telephone  communications  with  Geneva  (50  miles),  Lyons  (60  miles), 
Paris  (280  miles),  Grenoble  (30  miles),  are  practically  impossible  during  the 
greater  part  of  the  year,  and  it  is  necessary  to  wait  hours  for  a  connection.  In 
the  case  of  Paris  one  gets  the  connection  the  day  after  the  call  has  been  filed." 

In  other  words,  if  you  live  in  Paris,  and  happen  to  be  detained  in 
Chambery,  you  call  your  home  to-day,  you  get  it  to-morrow,  and  you 
tell  your  wife  that  you  won't  be  home  last  night.  Why,  Aviator  Gilbert 
recently  flew  in  an  aeroplane  from  Paris  to  Rheims,  one  hundred  miles, 
and  he  arrived  at  his  destination  before  the  news  of  his  departure  could 
be  telephoned. 

Peculieir,  if  not  Questionable,  Methods  of  Showing  Toll  Efficiency 

Now,  despite  this  situation,  and  it  is  a  serious  one,  and  I  have  a  lot 
of  friends  who  could  interest  you  and  give  you  instances  much  more 

19 


ludicrous  than  those  I  have  read — I  say,  despite  all  this,  Mr.  Lewis  has 
worked  up  figures  showing  a  higher  efficiency  for  foreign  countries  than 
for  the  telephone  in  this  country.  If  the  people  of  this  country  would 
only  wait,  would  only  take  their  turn,  would  file  your  message,  and  wait 
for  your  chance  to  talk,  we  could  build  up  a  showing  of  "efficiency" 
that  would  tickle  the  heart  of  Mr.  Lewis,  by  putting  up  just  enough 
circuits  to  carry  the  messages  filed  in  a  day.  We  would  not  have  to  use 
so  much  copper,  we  would  not  have  to  use  so  much  equipment,  and  we 
could  economize  wonderfully  on  the  number  of  people  we  have  to  em- 
ploy. But  do  the  people  want  that  kind  of  service?  Mr.  Lewis,  in  his 
comparison  of  what  he  calls  "adequacy"  of  telephone  facilities,  made  a 
great  showing  for  foreigfn  countries  by  simply  dividing  the  number  of 
messages  from  toll  terminals  by  the  number  of  telephone  stations. 
Well,  just  see  how  ridiculous  such  a  comparison  is!  If  we  were  to 
come  to  Providence  to-day  and  cut  down  the  number  of  telephones  by, 
say  four,  so  that  we  had  only  one-fourth  of  all  the  telephones  here  that 
you  have  now,  we  know  we  would  lose  some  long  distance  business,  but 
think  what  a  wonderful  quotient  you  would  get  for  long  distance  mes- 
sages per  phone  !  For  Mr.  Lewis'  statistical  purposes,  your  town  would 
be  ideal,  but  I  am  frank  to  say  that,  for  telephone  purposes  it  wouldn't 
be  much.  Now,  it  is  this  very  fact  that  shows  our  superior  develop- 
ment in  this  country.  People  do  not  have  to  leave  their  homes  to  tele- 
phone. Suppose  you  put  an  extension  station  upstairs  in  your  home. 
Originally,  with  one  telephone  in  your  home,  you  had  ten  calls  a  day ; 
with  your  extension  station,  you  may  have  a  total  of  twelve  calls  a  day. 
Before  you  ])ut  in  your  extra  station  your  quotient  of  "adequacy"  was 
ten ;  after  you  put  in  your  extra  telephone,  it  became  only  six ;  so  that, 
according  to  Mr.  Lewis,  your  facilities  have  become  approximately  one- 
half  as  efficient  as  they  were  before.  Now,  what  is  the  sense  of  punish- 
ing us  by  this  kind  of  comparison?  We  don't  want  to  stop  growing  in 
order  to  show  that  brand  of  "efficiency." 

Special  Service  Ignored  by  Mr.  Lewis 

I  mentioned  before  our  enormous  carrying  business  on  leased  lines. 
Well,  we  have  gone  further  than  that,  we  have  got  tie  lines.  New 
York  City  is  full  of  them.  We  lease  you  a  line  from  your  factory  to 
your  office,  and  you  handle  the  traffic  between  such  places  more  effi- 
ciently ;  we  do  all  the  maintaining,  etc.  We  have  got  thousands  and 
thousands  of  these  lines  in  this  country,  and  for  that  traffic  we  get  no 
credit  in  statistical  showing,  and  we  want  none ;  we  are  satisfied  that 
that  is  good  eliicient  engineering.  But  these  things  have  got  to  be  con- 
sidered bj'  any  student  who  wants  to  arrive  at  a  proper  conclusion. 

More  Niggers  in  the  Woodpile 

I  am  not  going  to  take  up  in  detail  all  the  "niggers"  in  that  exten- 
sive woodpile  of  statistics  presented  by  Mr.  Lewis.  And  these  "nig- 
gers" are  wonderfully  numerous.  For  instance,  in  counting  toll  mes- 
sages, the  figures  used  by  Mr.  Lewis  have  been  frightfully  inflated. 
Many  of  these  messages,  for  instance,  are  counted  twice  and  three 

20 


times,  as,  for  instance,  international  messages.  They  are  counted  in 
the  country  where  they  ori£,anate,  in  the  country  where  they  terminate, 
and  if  they  pass  through  more  countries,  they  are  counted  in  all  the 
countries  they  pass  through.  The  next  time  Mr.  Lewis  makes  up  a 
report  on  this  situation,  he  might  look  into  that.  Of  course,  we  haven't 
got  that  kind  of  proposition  in  this  country.  We  have  here  enough  of 
a  job  getting  one  toll  message  counted  once.  And  then,  again,  in  many 
cases,  Mr.  Lewis'  toll  messages  aren't  toll  messages  at  all ;  for  instance, 
in  Germany,  Mr.  Lewis  has  used  a  large  number  of  messages  as  toll 
messages  which  are  only,  as  we  are  advised  by  the  German  Govern- 
ment, a  species  of  no-charge  suburban  trunk  calls,  and  the  number  of 
these  improperly  included  messages  for  Germany  alone  is  greater  than 
the  total  number  of  toll  messages  in  the  United  States. 

Private  Ownership  the  Cause,  not  the  Effect,  of  our  Prosperity 

But  I  am  not  going  to  bother  with  all  this.  After  all,  you  know 
that  the  best  test  of  efficiency  and  rates  is  the  relative  development  of 
the  service,  and  you  know  how  that  has  worked  out.  But  Mr.  Lewis 
didn't  like  these  facts,  they  didn't  fit  in  with  his  theory  of  public  serv- 
ice motive  and  the  law  of  diminishing  returns.  So  he  said  the  figures 
didn't  mean  anything.  He  said  that  our  superior  development  was 
not  due  to  superior  efficiency  and  better  rate  schedules,  but  was  simply 
due  to  our  prosperity.  Now,  isn't  that  putting  the  cart  before  the 
horse  ?  Is  it  not  true  that  our  magnificent  prosperity  is  due  precisely  to 
the  manner  in  which  he  have  handled  our  affairs  ?  I  have  gone  down  to 
the  Battery  in  New  York  City  many  times,  and  watched  the  immi- 
grants come  in,  clad  in  their  quaint  garments  and  carrying  their  old 
carpet  bags,  and  I  have  watched  them  open  their  eyes  in  wonder,  and 
I  thought  I  could  see  in  many  of  them  our  future  police  officers  and 
our  car  line  conductors,  and  our  operators.  Why,  in  Buffalo  they  have 
hired  a  girl  to  lecture  to  us  in  one  of  our  public  demonstrations  of  the 
telephone.  She  was  an  Italian  girl  who  came  over  to  this  country  with- 
in the  last  few  years.  Her  mother  and  father  still  wear  the  quaint 
foreign  clothes  of  Italian  custom.  She  was  picked  out  of  our  operating 
rooms  because  she  had  the  most  perfect  English  enunciation  of  any 
girl  there,  and  she  is  now  illustrating,  in  her  rich  Italian  voice,  the 
proper  way  to  use  the  English  tongue.  That  little  instance  meant  much 
to  me ;  it  was  only  an  illustration  of  the  extent  to  which  opportunity 
in  this  country  has  spelled  our  wonderful  success.  Why,  it  is  precisely 
because  of  our  methods  of  railroad  building,  trolley,  electric  light  and 
other  developments,  and  the  development  of  our  magnificent  telephone, 
which  has  spread  itself  throughout  the  country,  that  we  have  prosperity 
in  this  country.  I  say  our  development  of  the  telephone  and  other  en- 
terprises has  antedated  and  been  the  cause  of  our  prosperity  in  this 
country.  No,  indeed,  Mr.  Lewis  cannot  explain  away  the  situation. 
Our  superior  telephone  development  is  a  fact,  and  can  be  accounted 
for  only  by  the  way  we  have  handled  it.  For  see,  suppose  you  go  to 
Europe  and  take  the  countries  where  the  telephone  is  in  private  hands. 
See  what  has  been  done  in  that  little  European  country  of  Denmark, 

21 


where  most  of  the  telephone  development  is  private.  In  Denmark  they 
have  twice  as  many  telephones  per  one  hundred  inhabitants  as  in  Ger- 
many, 2Y2  times  as  many  as  in  Great  Britain,  3  times  as  many  as 
in  the  Netherlands,  5  times  as  many  as  in  Belgium,  and  6  times  as 
many  as  in  France.  Sweden  and  Norway,  which  have  some  private 
operation,  but  not  as  much  as  Denmark,  rank  next,  and  in  the  city  of 
Stockholm  alone,  which  is  mostly  private,  they  have  a  larger  telephone 
development  than  in  any  other  city  of  the  world,  with  the  exception  of 
San  Francisco. 


Opportunities  Abroad 

Why,  gentlemen,  the  starved  condition  of  telephone  development 
in  the  European  countries,  where  the  governments  operate  the  service, 
would  offer  to  American  telephone  enterprise  a  most  wonderful  field! 
They  have  not  in  Europe  the  disadvantages  we  have  here ;  they  have 
towns  thickly  settled ;  they  have  not  the  vast  distances  that  we  have  to 
contend  with  ;  they  have  greater  possibilities  of  producing  a  full  volume 
of  traffic,  and  yet,  see  where  they  have  landed  under  government  man- 
agement. It  was  probably  this  which  Major  O'Meara,  the  Government 
Consulting  Engineer  in  Great  Britain,  had  in  mind  when  he  wrote  to 
us  recently,  acknowledging  a  copy  of  Mr.  Vail's  annual  report.  Here 
is  what  he  says  : 

"I  am  writing  to  thank  you  for  the  copy  of  the  Annual  Report  of  the  Di- 
rectors of  the  American  Telephone  &  Telegraph  Company  for  1913.  I  have 
been  much  interested  in  the  part  of  the  report  dealing  with  Government  Own- 
ership and  Operation.  After  spending  over  sixteen  years  out  of  my  thirty-two 
years  public  service  in  the  British  Post  Office  Department  I  have  come  definitely 
to  the  conclusion  that  a  Government  Department  is.  as  a  rule,  an  unsuitable 
organization  to  manage  services  of  the  character  of  the  telegraphs  and  tele- 
phones. And  the  people  in  this  country  have  been  finding  this  out  for  them- 
selves during  the  past  two  years." 


Is  the  Post  Office  Department  Really  Efficient? 

Now  I  approach  that  part  of  the  subject  that  is  not  very  pleasant 
to  me,  and  that  is  the  question  of  comparing  the  efficiency  of  the  Post 
Office  Department  with  that  of  the  telephone  in  this  country.  We  tele- 
phone people  have  been  busy  in  the  past.  We  have  not  had  much  time 
to  worry  about  whether  or  not  the  Post  Office  Department  was  as  effi- 
cient as  it  should  be.  We  have  been  busy  enough  trying  to  be  as  efficient 
as  we  could.  We  have  appreciated  that  the  Post  Office  was  properly  a 
government  institution,  and  that  part  of  the  burden  of  this  enterprise 
could  very  properly  be  charged  to  general  taxation,  because  it  is  placed 
at  the  disposal  of  all,  and  is  used  by  all  alike,  and,  being  a  matter  of 
common  concern,  it  is  very  properly  a  matter  subject  to  common  sup- 
port. But  now,  when  the  Post  Office  is  used  as  a  criterion  by  which  to 
judge  our  progress,  when,  by  some  mysterious  method  of  computing 
efficiencies  in  these  services,  Mr.  Lewis  has  done  something  that  no- 
body on  earth  has  ever  attempted  to  do,  that  is,  has  not  only  compared 
the  telephone  in  one  country  with  the  telephone  in  another  by  arbitrary 

22 


unit  equivalents,  but  has  compared  the  postal  service  in  this  country 
with  the  utterly  dissimilar  telephone  service  in  this  country, — then,  I 
say,  we  have  to  sit  up  and  take  notice.  Now  the  telephone  fraternity 
does  not  want  to  be  understood  as  criticizing  the  personnel  of  the  Post 
Office  Department  as  such.  On  the  contrary,  there  is  a  bond  of  sym- 
pathy existing  between  the  telephone  officials  and  those  in  the  postal 
service.  The  Post  Office  personnel  has  had  in  the  past,  and  has  now, 
many  good  and  faithful  men.  W'e  pity  them.  They  have  been  tied  to 
a  post.  They  have  been  "postalized"  for  years — that  is  my  interpreta- 
tion of  "postalization."  Men  come  into  that  service  full  of  ambition 
and  energy,  and  a  keen  desire  to  accomplish,  and  they  find,  before  long, 
that  they  are  up  against  a  stone  wall,  that  they  are  hampered  on  all 
sides  by  restrictions  and  the  rigidity  of  a  system  which  forces  them 
either  to  get  out  or  float  with  the  stream.  Don't  take  my  word  for 
it, — this  is  not  my  opinion.  In  February,  1908,  a  Joint  Commission, 
which  had  been  appointed  by  Congress  to  investigate  the  Business 
Method  of  the  Post  Office  Department,  and  of  which  the  Hon.  John 
A.  Moon,  present  Chairman  of  the  House  Committee  on  Post  Offices 
and  Post  Roads,  was  a  member,  submitted  its  report  to  Congress.  I 
wish  I  had  time  to  read  you  some  of  the  extracts  of  this  report,  as  a 
commentary  on  the  alleged  efficiency  of  the  Post  Office  Department, 
but  I  mention  this,  here,  as  indicating  how  the  defects  of  the  service 
are  not  attributable  to  the  personnel,  but  to  the  system: 

"We  also  desire  to  point  out  that  our  criticisms  are  directed  at  methods, 
and  not  at  individuals.  The  higher  officials,  at  any  rate,  and  the  best  of  the 
staff,  are  keenly  alive  to  the  necessity  of  reforms ;  but  the  service  has  grown 
from  small  beginnings  over  a  long  period  of  years,  hampered  by  restrictive 
laws  which  may  have  been  necessary  in  the  past,  and  may  even  now  be  con- 
sidered necessary  to  some  extent  for  a  government  department,  but  which 
would  render  it  practically  impossible  for  any  private  business  to  survive." 


Initiative  and  Efficiency  Destroyed 

)ughly  the  initiative  and  efficiency  of  t 
come  dissolved  into  the  inertia  of  their  surroundings  tne  moment  t 
enter  the  Department  is  indicated  in  another  portion  of  this  report : 


"The  work  of  the  Department  and  its  development  is  hindered  all  along 
the  line  by  slavish  adherence  to  old  methods  and  to  precedents  created  in  pre- 
vious years,  and  many  reforms  which  might  otherwise  be  instituted  are  hin- 
dered— if  not  entirely  prevented — by  appeals  to  the  decisions  of  the  Comptrol- 
ler, made,  perhaps,  many  years  ago  under  entirely  different  conditions.  Then, 
again,  the  conservatism  of  Government  officials  is  a  generally  admitted  fact. 
There  is  no  inducement  to  employees  to  suggest  improvements  in  the  service 
for  the  reason  that  if  these  improvements  result  in  greater  efficiency  or  econ- 
omy of  administration  they  will  receive  little  credit ;  and,  on  the  other  hand, 
if  new  methods  are  not  successful  they  will  be  charged  with  the  whole  blame. 
Moreover,  to  suggest  improvements  which  will  result  in  economy  is  to  create 
hostility  among  other  members  of  the  organization,  whose  services  may  thereby 
be  rendered  unnecessary.  On  the  other  hand,  a  clerk  who  adheres  to  the  rou- 
tine which  existed  prior  to  his  appointment  will  be  left  undisturbed  and  will 
receive  credit  by  performing  his  duties  with  even  a  slight  degree  of  efficiency 
and  accepting  without  comment  methods  which  have  been  handed  down  from 
earlier  generations." 

23 


Absence  of  Accounting  Methods 

Think  of  it !  Mr.  Lewis  takes  the  Post  Office  Department  and 
constructs  efficiency  statistics,  which  he  compares  with  the  telephone, 
when  this  Joint  Commission,  which  secured  the  services  of  some  of  the 
most  expert  firms  of  accountants  in  this  country,  made  the  following 
statement  in  its  report  to  Congress : 

"Past  experience  had  disclosed  the  lack  of  such  a  central  system  of  ac- 
counts in  the  Post  Office  Department  as  rendered  the  determination  of  the 
cost,  profit,  or  loss  in  connection  with  a  given  line  of  service  impracticable. 
For  more  than  one  hundred  years  the  great  and  stupendous  business  of  the 
Post  Office  Department  has  been  operated  without  being  overhauled  or  looked 
into  from  the  standpoint  of  critical,  expert  scrutiny  of  its  business  methods." 


Lack  of  Cooperation 

The  following  examples,  taken  haphazard  from  this  official  rejxjrt, 
will  indicate  how  vast  and  deep-seated  have  become  the  accumulated 
defects  of  nearly  a  century  of  mismanagement.  For  instance,  as  to  the 
total  lack  of  standardization  in  methods  and  co-operation  between  the 
various  branches  of  the  Department,  the  report  says: 

"In  the  course  of  our  investigation  into  the  main  subject  referred  to,  we 
have  necessarily  had  occasion  to  observe  the  general  methods  of  administra- 
tion throughout  the  Department  and  service  and  have  been  particularly  im- 
pressed with  the  divergencies  therein  in  different  bureaus,  divisions,  and  sec- 
tions in  handling  transactions  of  a  similar  character,  and  we  shall  show  in  this 
report,  how,  under  the  present  system  of  administration,  these  appear  to  have 
grown  up  over  a  long  period  of  years  without  any  very  definite  plan.  There 
exists  an  independence  and  lack  of  co-operation  not  only  between  different 
bureaus  and  different  divisions,  but  even  between  different  sections  of  the  same 
division,  and  in  identical  field  operations  which  must  undoubtedly  do  much  to 
hamper  the  service  and  increase  its  cost." 


Evils  of  Bureaucracy  and  Over-Centralization 

The  Commission  further  calls  attention,  in  the  following  language, 
to  the  effect  upon  efficiency  exercised  by  the  fatal  influence  of  bureau- 
cracy and  over-centralization : 

"Every  request  of  even  the  smallest  post  office,  for  allowances  for  any 
purpose  whatever  has  to  be  made  to  the  headquarters  at  Washington.  Allow- 
ances are,  in  a  large  number  of  cases,  for  amounts  less  than  $1,  and  it  would 
seem  that  if  there  were  a  district  superintendent  in  the  field  who  could  pass 
on  such  matters  it  would  save  a  large  amount  of  routine  work  and  consequent 
expense  in  the  Department  at  Washington.  From  the  fact  that  it  has  to  deal 
with  nearly  65,000  postmasters  scattered  over  a  vast  area  of  territory,  it  cannot 
be  in  a  position  to  determine  intelligently  or  efficiently  upon  the  needs  of  each. 

"The  bureau  chiefs  appear  to  spend  an  increasing  amount  of  their  time  in 
the  mere  routine  work  of  signing  formal  documents  and  passing  upon  requests 
of  various  kinds  for  allowances,  or  otherwise,  which  could  be  intrusted  to 
properly  qualified  officials  in  the  field  without  aetriment  to  the  postal  service. 
This  point  recurs  at  every  stage  of  the  inquiry,  and  appears  to  call  for  some 
radical  change  in  administrative  methods  if,  by  the  continual  growth  of  the 
postal  business,  the  Department  is  not  either  to  lose  control  over  the  service 
or  to  exercise  its  control  in  such  a  perfunctory  manner  as  to  make  it  practically 
useless." 


Lack  of  Labor-Saving  Devices 

Indeed,  even  in  the  most  simple  and  rudimentary  requirements  of 
efficient  administration, — the  use  of  labor-saving  devices, — the  Com- 
mission discloses  a  surprising  condition  in  the  Post  Office  Department, 
calling  attention  to  it  in  the  following  language : 

"There  is  a  lamentable  lack  of  labor-saving  devices  practically  throughout 
the  whole  Department  and  service.  Even  for  such  an  elementary  machine  as 
a  typewriter,  we  are  informed  that  there  are  hundreds  of  applications  on  file 
which  the  Department  has  been  quite  unable  to  fill.  Of  the  more  valuable 
machines,  such  as  arithmometers,  book-typewriters,  and  calculating  machines, 
there  are  few  in  use,  and  even  in  the  field  post  offices  such  scales  as  are  prcH 
vided  for  the  special  weighing  of  mails  now  in  progress  are  of  a  very  inferior 
grade,  and  from  the  information  we  have  gathered  it  would  appear  that  with 
few  exceptions  there  are  no  mechanical  conveying  devices  in  any  office  for  ex- 
peditiously handling  and  weighing  the  mails." 

Lack  of  Efficient  Audit  System 

Examples  of  this  anarchical  condition  of  the  postal  service,  as  dis- 
closed by  the  official  report  of  the  Joint  Commission,  are  numerous,  but 
I  have  not  the  time  to  refer  to  them.  I  could  mention,  for  instance,  the 
reference  the  Commission  makes  to  the  fact  that  there  is  a  complete 
lack  of  any  audit  system  or  any  other  system  which  would  enable  any 
sort  of  check  as  to  efficiency  to  be  made.  The  Commission  says,  for 
instance,  "We  have  seen  in  different  efficiency  statements  of  work 
done,  that  exactly  the  same  class  of  work  done  by  individuals  has  varied 
in  exceptional  cases  from  under  2,000  to  over  22,000  operations  in  the 
same  period  of  time."  And  again,  referring  to  the  accounting  system  in 
this  connection,  "Our  investigation  has  confirmed  the  impression  gath- 
ered from  a  study  of  it,  that  the  whole  of  these  methods  are  crude  in 
the  extreme,  and  such  as  no  private  business  concern  or  corporation 
could  follow  without  the  certainty  of  loss,  if  not  of  financial  disaster." 
And  yet  these  conditions  in  the  postal  service,  which  baffled  the  most 
expert  accountants  of  the  Joint  Commission,  did  not  seem  to  worry 
Mr.  Lewis  at  all,  but  he  blithely  sailed  through  the  whole  gamut  of 
postal  operations,  simply  selected  his  statistics,  and,  out  of  the  nebulous 
cloud  of  unknown  and  unknowable  factors,  he  pulled  forth  a  marvelous 
model  of  efficiency,  to  shame  forever  the  results  of  private  operation. 
It  did  not  matter  that  the  Post  Office  has  no  plant  and  practically  no 
equipment,  except  some  mail  bags,  mail  locks,  mail  boxes,  and  a  few 
other  inconsequential ;  that  the  Post  Office  Department  assumes  no 
financial  responsibility  for  any  but  a  small  part  of  the  operations  in  the 
discharge  of  postal  functions ;  that  even  in  public  buildings,  it  is  the 
tenant  of  the  Treasury  Department,  the  buildings  being  constructed 
and  paid  for  by  appropriations  expended  by  the  Treasury  Depart- 
ment ;  it  did  not  matter  that  no  rentals  are  ever  collected  or  computed ; 
that  the  Post  Office  expenditures  for  heating,  lighting,  repairs,  janitor 
service  and  supplies  are  paid  for,  not  from  postal,  but  from  other  appro- 
priations ;  that  the  cost  of  the  Post  Office  Department  at  Washington 
and  of  the  Auditor's  office,  embracing  salaries  of  more  than  1,000  offi- 
cials and  employees,  are  paid  from  appropriations  known  as  legisla- 

25 


tive,  executive  and  judicial  services,  never  appearing  in  the  postal  esti- 
mates, accounts  and  balances.  All  Mr.  Lewis  had  to  do  was  to  get  the 
number  of  mail  pieces,  and  take  the  number  of  postal  employees  (and, 
incidentally,  Mr.  Lewis  used  a  figure  for  postal  employees  which  is 
less  by  35,000  than  the  figure  given  by  the  Postmaster  General  three 
years  before  in  his  Annual  Report  for  the  year  1909),  then  divide  your 
mail  pieces  (as  if  you  could  get  an  average  mail  piece)  by  your  em- 
ployees, and  presto !  you  have  your  efficiency.  Now,  with  us,  in  the 
telephone  business,  there  is  no  trouble  about  accounting.  Our  national 
government  knows  very  well  the  need  of  proper  accounting,  and  recog- 
nizes it — so  far  as  we  are  concerned.  The  Interstate  Commerce  Com- 
mission has  prescribed  for  the  Bell  System  a  scheme  of  accounts  as 
complete,  minute  and  elaborate  as  any  to  be  found  within  the  whole 
range  of  scientific  accounting,  and  it  has  kept  us  going  some,  too,  I  can 
tell  you,  to  toe  the  mark. 

Promised  Efficiency  of  Peculiar  Kind 

There  is  just  one  other  point  about  Mr.  Lewis'  scheme  of  efficiency 
that  I  should  like  to  touch  upon,  although  my  time  is  growing  short, 
and  I  can  only  refer  to  it  very  briefly.  That  is  the  great  efficiency  Mr. 
Lewis  is  going  to  get  by  combining  the  telegraph  with  the  postal  serv- 
ice, and  eliminating  all  the  so-called  extra  motions  in  sending  a  tele- 
gram, by  the  simple  use  of  a  postage  stamp.  Now  you  will  find  all  these 
operations  analyzed  in  the  study  that  we  have  prepared,  that  I  men- 
tioned to  you  before,  but  here  is  an  example  of  one  of  the  motions  that 
Mr.  Lewis  is  going  to  cut  out  by  the  use  of  the  postage  stamp.  Under 
the  present  system  of  sending  a  telegram,  the  operator  has  to  put  down 
the  time  of  sending  and  his  initials,  and  the  time  of  receiving  and  his 
initials.  In  fact,  this  operation  is  required  by  law  in  several  States. 
This  is  one  of  the  operations  that,  according  to  Mr.  Lewis,  is  a  useless 
one,  to  be  cut  out  by  the  use  of  a  postage  stamp.  Think  of  it !  Getting 
efficiency  without  knowing  when  your  telegram  has  been  sent,  when  it 
has  been  received,  and  who  sent  it,  and  who  received  it,  in  case  of  delay. 
And  the  Post  Oflfice  system,  which  is  to  work  this  transformation  of 
efficiency — well,  I  guess  you  have  seen  enough  samples  of  the  kind  of 
efficiency  that  the  Post  Office  would  inject  into  the  telegraph  service. 
Why,  in  one  of  the  portions  of  the  Joint  Commission's  report,  we  find 
a  list  of  19  difTerent  operations  which  are  gone  through  for  the  simple 
drawing  of  a  pay  warrant,  not  counting  the  operations  while  it  is  in 
the  hands  of  the  Auditor,  and  these  operations  are  finally  wound  up  by 
an  office  boy,  over  whom  no  supervision  is  exercised. 

Is  the  Parcels  Post  Really   Self-Sustaining? 

Now  Mr.  Lewis,  in  his  talk  about  "public  service  motive,"  dwelt 
upon  the  way  the  parcels  post  has  been  working  out ;  how,  by  the  simple 
injection  of  the  "public  service  motive"  into  the  business,  the  parcels 
post  has  done  a  great  public  work  and,  at  the  same  time,  has  made  a 
neat  little  profit.    Now  all  this  would  be  fine,  if  it  were  only  so,  and  I 

26 


just  want  to  call  Mr.  Lewis'  attention,  and  I  don't  really  need  to,  be- 
cause he  knows  it  himself,  to  the  debates  which  have  taken  place,  not 
so  long  ago,  in  Congress,  on  just  this  very  subject.  Mr.  Lewis  knows 
that  Mr.  Kindel — I  understand  he  professes  to  be  a  deep  and  profound 
student  of  the  parcels  post — has  made  the  statement  that  no  one  to-day 
knows  what  the  parcels  post  costs,  that  no  one  knows  what  it  is  earn- 
ing; and  that  other  distinguished  Congressmen  like  Senator  Joseph 
Bristow,  of  Kansas,  who  was  Chairman  of  the  Senate  Committee  on 
Post  Offices  and  Post  Roads,  which  drafted  the  original  parcels  post 
law,  has  said  that  there  is  no  way  on  earth  of  telling  whether  the  par- 
cels post  is  making  a  profit  or  not.  And  Mr.  Lewis  probably  knows 
that  Mr.  Kindel  complained  to  the  Interstate  Commerce  Commission 
against  the  recent  changes  in  the  parcels  post,  and  that  the  only  answer 
he  got  from  Chairman  Clark,  of  the  Interstate  Commerce  Commis- 
sion, was  that  the  parcels  post  was  in  the  experimental  stage  anyway; 
and  that,  when  Mr.  Kindel  wanted  to  find  out  from  Postmaster  Gen- 
eral Burleson  something  as  to  the  profit  on  the  parcels  post,  Mr.  Burle- 
son could  not  furnish  a  single  figure  showing  anything  as  to  the  real 
cost.  So,  either  Mr.  Lewis  is  possessed  of  information  as  to  the  parcels 
post  which  the  people  at  Washington  have  been  vainly  seeking,  or  else 
his  figures  on  the  parcels  post  profits  are  members  of  the  same  family 
as  his  efficiency  statistics. 

Now  I  guess  I  have  said  enough  to  show  you  how  the  situation 
stands  as  to  the  efficiency  of  our  telephones  in  this  country  compared 
with  telephones  abroad,  and  as  to  the  comparisons  which  have  been 
made  between  the  efficiency  of  the  Post  Office  of  this  country  and  of 
our  telephone  system.  I  have  given  you  the  facts,  now  I  will  give  you 
one  or  two  reasons. 

Permanency  of  Plan  and   Purpose  Through   Continuity  of 

Personnel 
In  the  private  telephone  system  of  this  country  we  have  Mr.  Vail, 
who  has  been  with  the  industry  from  its  inception,  being  the  first  Gen- 
eral Manager  of  the  so-called  Bell  System,  and  now  its  head.  Under 
him,  and  holding  important  positions  throughout  the  entire  country, 
are  men  who  have  been  in  the  service  for  years,  as  your  Mr.  Potter, 
Mr.  Howard  and  others,  whose  sole  recommendation  for  advancement 
and  continuance  in  the  service  rests  upon  their  experience  and  fitness 
for  the  positions  they  hold.  Contrast  this  with  the  government-owned 
Post  Office,  if  you  please.  To  quote  again  from  the  findings  of  the 
Joint  Commission : 

"It  appears  too  obvious  to  require  argument  that  the  most  efficient  service 
can  never  be  expected  as  long  as  the  direction  of  the  business  is,  as  at  present, 
intrusted  to  a  Postmaster-General  and  certain  assistants  selected  vkfithout  spe- 
cial reference  to  experience  and  qualifications  and  subject  to  frequent  change. 
Before  the  Postmaster-General  and  his  assistants  can  become  reasonably  famil- 
iar with  the  operations  of  the  service  they  are  replaced  by  others,  who,  in  turn, 
are  called  upon  to  resign  before  they  can,  in  the  nature  of  things,  become  quali- 
fied by  knowledge  and  experience  to  perform  their  allotted  task.  Under  such 
a.  system  a  large  railroad,  commercial,  or  industrial  business  would  inevitably 
go  into  bankruptcy." 

27 


Or,  to  go  one  step  back  of  this — "to  get  behind  the  scenes" — I 
quote  from  a  statement  by  our  friend,  Mr.  Fitzgerald,  Chairman  of  the 
House  Committee  on  Appropriations,  in  a  special  report  appearing  in 
the  "Congressional  Record"  of  January  20,  1914,  wherein  he  said: 

"Under  Republican  administrations  it  had  been  the  custom  for  some  years 
to  appoint  the  chairman  of  the  National  Republican  Committee  Postmaster- 
General,  so  that  there  might  be  no  mistake  as  to  the  partisan  character  of  the 
men  appointed  as  postmasters  in  the  first  and  second  class  postoffices  in  the 
country.  The  abuse  became  so  great  under  Postmaster-General  Hitchcock  and 
Postmaster-General  Cortelyou  that  President  Taft,  a  Republican  President, 
was  compelled  to  cry  out  against  the  existing  conditions  and  to  admit  that  these 
partisans  not  only  did  not  give  their  time  to  the  public  service  for  which  they 
were  paid,  but  that  evidently  he  was  helpless  to  compel  them  to  do  so." 


Post  Office  Troubles  of  Long  Standing 

That  this  condition  is  not  a  recent  development,  but  dates  back 
into  the  distant  past,  is  strikingly  illustrated  by  the  comments  Post- 
master-General Howe  had  to  make  with  reference  to  it.  In  his  report, 
dated  November  18,  1882,  with  reference  to  salaries  and  allowances  of 
third  and  fourth-class  postmasters,  now  amounting  to  $25,000,000,  he 
says: 

"In  theory  these  orders  are  made  by  the  First  Assistant  Postmaster-Gen- 
eral ;  in  practice  they  are  made  by  a  fourth-class  clerk  in  the  office  of  the  First 
Assistant.  No  matter  by  whom  made,  this  distribution  will  not  be  well  made. 
Finite  intelligence  could  not  make  a  wise  and  just  allotment  of  such  a  fund; 
infinite  intelligence  can  not  be  obtained  in  fourth-class  clerks.  Postmasters  are 
eager  for  large  allowances.  The  most  importunate  are  apt  to  be  best  served. 
They  ask  earliest  and  oftenest.  They  employ  every  kind  of  entreaty,  offer 
every  kind  of  influence,  personal  and  political." 

And  the  report  of  the  accountants  of  the  Joint  Commission  on 
Business  Methods  of  the  Post  Office,  in  commenting  upon  it,  remarks 
that: 

"There  is  still  no  standard  by  which  the  economical  administration  of  a 
postoffice  can  be  gauged.  Appointments  of  postmasters  are  still  made  almost 
entirely  for  political  reasons  and  not  by  reason  of  the  applicant's  ability  or 
knowledRC  of  the  workings  of  the  postal  service.  The  criticisms  made  on  the 
compensation  of  third  and  fourth  class  postmasters  still  apply  to  those  of  the 
fourth  class.  This  report,  reread  after  a  lapse  of  twenty-five  years,  ^ives  a 
striking  illustration  of  the  stagnation  that  has  pervaded  the  whole  admmistra- 
tion  and  perpetuated  defects  which,  even  at  that  time,  were  so  glaring  as  to 
need  the  strong  condemnation  meted  out  to  it  by  the  then  Postmaster-General." 

Shortness  of  Tenure  the  Rule  in  Post  Office 

This  short  and  uncertain  tenure  of  office  of  Postmasters  General 
and  their  Assistants,  including  the  postmasters  of  the  larger  cities, — 
this  series  of  political  gusts  which  is  apt  to  blow  them  into  office  in  one 
political  wind,  and  blow  them  out  in  another,  has  so  far  made  impos- 
sible the  introduction  of  any  radical  and  necessary  reform;  for  al- 
though the  person  in  office  discovers  the  need,  before  he  can  effect  the 
necessary  change,  political  fortune  sweeps  him  out  of  office  again. 
Whatever  progress  in  efficiency  is  claimed  by  one  Postmaster-General 

28 


is  disclaimed  by  his  successor.  You  are  all  familiar,  for  instance,  with 
the  serious  attempts  Mr.  Hitchcock  made  for  his  reform  in  his  depart- 
ment. Just  about  the  time  he  began  fully  to  appreciate  the  true  im- 
mensity of  his  task,  a  political  change  ended  his  Post  Office  career,  and 
such  progress  as  he  claimed  to  have  made  was  promptly  repudiated  by 
his  successor.  For  instance,  this  is  what  Postmaster-General  Burleson 
had  to  say  about  the  work  of  the  Department,  in  a  statement  given 
out  to  the  public  shortly  after  taking  office : 

"  'The  all-absorbing  programme  of  the  last  Administration  was  the  placing 
of  the  Post  Office  Department  on  a  paying  basis,'  says  the  report.  'The  policies 
pursued  in  the  effort  to  succeed  at  this  plan  were  overworked  and  resulted  in 
defective  administration  and  just  criticism  on  the  part  of  the  public 

"  'That  efficiency  and  economy  should  be  substituted  for  wastefulness  and 
extravagance  needs  no  argument,  but  the  postal  service  affects  so  vitally  the 
interests  of  the  entire  population  of  the  country  that  economy  which  means  a 
curtailment  of  postal  facilities  operates  as  a  check  to  the  social  and  industrial 
progress  of  the  country.  The  people  are  entitled  to  the  best  facilities  adminis- 
tered in  the  most  efficient  manner.  That  the  facilities  furnished  during  the 
last  four  years  were  not  the  best  is  clearly  established  by  the  facts.' " 


Post  Office  Inertia 

As  illustrating  the  difficulty  of  securing  any  reform  under  present 
conditions,  I  would  call  your  attention  to  a  statement  made  by  Mr. 
Fitzgerald,  Chairman  of  the  Commission  on  Appropriations,  appear- 
ing in  the  "Congressional  Record"  under  date  of  January  20,  1914, 
wherein  he  makes  the  following  significant  statement : 

"The  so-called  Economy  and  Efficiency  Commission  to  which  the  gentle- 
man from  Iowa  refers,  and  for  which  perhaps  he  has  more  respect  than  I 
have,  spent  $260,000  in  its  work.  I  have  challenged  from  time  to  time  anyone 
to  point  to  a  single  original  recommendation  which  that  commission  has  made 
which  has  resulted  in  the  saving  of  a  single  dollar  to  the  United  States." 

The  impossibility  of  accomplishing,  under  present  conditions,  any 
improvement  or  reform  in  the  service,  is  true  of  any  of  the  Govern- 
mental Departments  handled  similarly  to  the  Post  Office  Department. 
It  is  interesting,  for  instance,  to  note  the  report  of  Mr.  French,  who, 
under  the  administration  of  President  Roosevelt,  was  commissioned  to 
examine  into  the  condition  of  the  Government  Printing  office.  Mr. 
French's  statement,  appearing  in  the  New  York  Times  under  date  of 
October  10,  1913,  reads  as  follows: 

"I  never  got  beyond  a  preliminary  report  after  about  three  weeks'  work. 
The  work  was  never  finished.  The  expenditures  committee  faded  away,  when 
a  new  Congress  came  in,  and  there  was  nothing  at  all  left  as  evidence  that  it 
had  existed,  except  some  incomplete  and  generally  irrelevant  papers  some- 
where in  dusty  pigeon-holes  and  sundry  entries  on  the  ledger  of  the  disbursing 
clerk  of  the  Senate.  My  report  was  among  those  dust-gathering  papers.  I 
doubt  if  any  member  of  the  committee  ever  read  it.  It  was  wholly  abortive. 
My  work  was  entirely  useless.  The  money  paid  was  absolutely  wasted.  The 
committee  accomplished  nothing,  and  I  have  often  doubted  if  it  ever  intended 
or  wished  to  accomplish  anything.  It  is  against  the  Washington  idea  to  do 
anything  to  check  expenditures.  Yet  1  was  able  to  show  that  at  least  $1,500,000 
a  year  could  be  saved  in  the  operating  of  the  Government  Printing  Office,  with- 
out disturbing  the  condition  of  the  workers  as  to  their  pay  or  privileges." 

29 


Encouragement  of  Permanency  in  Private  Enterprise 

Efficiency,  under  such  circumstances,  is,  of  course,  impossible. 
Permanency  and  continuity  of  personnel  are  essential  to  the  very  heart 
of  an  enterprise,  and  it  is  precisely  because  private  enterprise  recognizes 
and  enforces  this  principle,  that  it  is  so  much  better  equipped  than  pub- 
lic enterprises  to  produce  satisfactory  results.  As  emphasizing  this 
effort  on  the  part  of  the  corporation  to  make  for  loyalty,  efficiency  and 
permanency  in  its  personnel,  I  wish  to  bring  out  the  treatment  of  the 
employees  of  the  telephone  interests,  in  the  adoption  of  its  magnificent 
pension,  sickness,  disability  and  insurance  plan.  The  entire  plan,  aside 
from  the  accident  feature,  which,  of  course  does  not  take  tenure  into 
consideration,  is  arranged  with  a  view  to  encouraging  and  rewarding 
permanency  in  employment.  The  plan  provides  for  the  care  of  em- 
ployees during  sickness  and  accident,  and  the  pensioning  of  employees 
when  they  reach  an  age  when  they  cannot  render  the  service  necessary 
to  conduct  the  business  of  the  company.  It  makes  provision  for  the 
payment,  to  the  beneficiary,  of  insurance  in  cases  where  the  employees 
die  after  five  years  in  the  company's  service, — all  of  this,  without  any 
contribution  on  the  part  of  the  employee  other  than  faithful  and  con- 
scientious service.  The  amount  of  the  payments  increases  with  the 
term  of  employment.  Contrast  this  with  the  treatment  by  the  Govern- 
ment of  its  postal  employees.  Although  continually  agitated,  no  ade- 
quate provision  has  been  made  for  the  relief  or  care  of  its  employees. 
To  refute  any  notion  that  the  employees  in  the  Government's  service 
are  not  subject  to  all  of  the  ills  incurred  in  private  employment,  it  is 
interesting  to  note  the  comment  of  Mr.  Reilly  on  the  floor  of  the  House, 
as  reported  in  the  "Congressional  Record"  of  January  16,  1914: 

"It  was  not  until  I  became  a  member  of  this  body  that  I  learned  that  old 
worn-out  letter  carriers  and  other  superannuated  employees  of  the  Government 
were  not  retired  on  part  pay,  but,  on  the  contrary,  were  dismissed  from  the 
service  when  they  could  no  longer  keep  up  the  pace.  One  of  the  first  letters  I 
received  after  being  elected  a  Member  of  Congress  was  from  an  old  postal 
employee,  who  had  received  an  official  notice  from  his  postmaster  informing 
him  that  he  had  been  off  duty  the  allotted  number  of  days  in  the  year  allowed 
by  the  department  and  that  his  resignation  would  be  accepted.  The  simple 
statement  of  that  heart-broken  man  asking  me  to  assist  in  having  him  kept  on 
the  rolls  made  my  heart  ache.  He  had  spent  34  years  of  his  life  pounding  the 
pavements  in  all  kinds  of  weather  and  at  all  hours  of  the  day  and  night,  and 
was  known  and  loved  by  the  citizens  of  the  community  he  served,  composed  of 
all  classes  and  creeds  and  political  affiliations.  He  had  not  only  given  the  best 
years  of  his  life  to  the  Government  in  building  up  the  Postal  Service,  but  was 
at  an  age  and  in  such  a  condition  that  he  could  not  hope  to  find  employment  of 
any  kind.  He  was  in  such  financial  straits  that  if  thrown  on  the  world  he 
would  have  to  depend  on  the  bounty  of  relatives  or  friends,  or  else  become  a 
public  charge." 

And  in  the  same  issue  of  the  "Record"  we  find  the  following  state- 
ment by  Mr.  GrifTen : 

"The  employees  in  the  Postal  Service,  and  particularly  the  city  and  rural 
carriers,  post-office  clerks,  and  laborers,  are  paid  only  for  the  actual  time  they 
are  employed.  When  overtaken  by  sickness  or  if  they  meet  with  an  accident 
and  become  incapacitated  for  duty  their  pay  ceases  at  once.  It  matters  not  if 
an  accident  was  caused  by  the  grossest  negligence  on  the  part  of  the  Govern- 

30 


ment,  these  employees  liave  no  redress  for  damages,  not  even  for  the  loss  of 
salary.  They  are  laid  oflF  without  pay  until  they  are  able  to  assume  their  official 
duties,  and  should  the  sickness  or  accident  be  of  a  nature  to  confine  them  for 
a  period  of  more  than  150  days  they  are  notified  to  hand  in  their  resignation, 
because  a  department  rule  provides  that  no  employee  will  be  excused  for  a 
longer  period,  no  matter  what  the  cause  may  be.  *  •  *  And  now,  Mr.  Oiair- 
man,  what  is  the  reward  for  these  men  and  women  who  give  the  best  years 
of  their  lives  to  the  public  service?  Well,  it  is  hard  for  me  to  say  it,  because 
I  detest  ingratitude,  governmental  or  otherwise,  these  employees  are  forced  to 
resign  when  they  become  superannuated,  unceremoniously  kicked  out,  and  told 
that  they  are  inefficient  and  can  no  longer  do  the  work  required  of  them — 
outlived  their  usefulness.  It  is  one  of  the  saddest  incidents  of  our  govern- 
mental life.  Thrown  out  with  the  flotsam  and  jetsam  of  humanity  who  have 
no  aim  or  object  in  life,  because  years  of  ardent  labor  have  used  up  their 
energy  and  vitality  Yes,  Mr.  Chairman,  like  an  obsolete  piece  of  machinery 
or  a  broken  piston  rod,  they  are  thrown  on  the  scrap  heap." 

How,  under  these  circumstances,  can  we  expect  that  the  efficiency 
of  the  Postal  Service  will  in  any  way  approach  the  present  efficiency  of 
the  telephone  company? 

Permanency  of  Plan  Through  Continuous  Financing 

But  there  is  another  and  very  important  fundamental  difference 
in  the  method  of  management  which  distinguishes  public  enterprise 
from  private,  and  that  is,  Permanency  of  plan  and  purpose  through  a 
proper  scheme  of  financing.  No  enterprise  under  the  sun  can  be  run 
with  a  proper  regard  for  the  needs  of  the  service,  unless  there  be  a 
continuity  of  plan  and  scheme  of  financing  which  will  not  only  take 
<are  of  the  present  immediate  needs,  but  which  will  look  far  enough 
into  the  future  to  assure  constant  readiness  on  the  part  of  the  utility  to 
serve  the  needs  of  those  coming  after. 

There  is  on  file  in  the  Engineering  Department  of  the  Bell  Sys- 
tem, and  there  is  a  large  corps  of  employees  constantly  engaged  in  the 
work,  a  comprehensive  series  of  plans  which  are  known  as  fundamental 
development  plans.  They  cover  every  city  of  the  country  in  which  the 
system  operates,  and  the  studies  from  these  plans  anticipate  and  make 
provision  for  growth  for  10,  20  and,  in  some  cases,  30  years  in  ad- 
vance. The  service  which  is  to-day  being  rendered  in  many  of  our 
cities  has  been  made  possible  only  because,  years  ago,  plans  were  made, 
and  rigorously  followed  up  by  the  necessary  investment,  throughout  a 
continuous  period.  As  an  example  of  anticipating  future  needs,  and  as 
controverting  the  notion  that  we  have  reached  the  end  of  our  devel- 
opment, there  are  under  way  to-day  studies  and  preparations  for  the 
future,  directed  by  a  staflf  of  550  expert  engineers,  scientists,  former 
professors,  post  graduates,  students  and  scientific  investigators,  the 
graduates  of  over  70  universities.  The  budget  for  this  year  calls  for 
the  expenditure  of  upwards  of  Sixty  Million  Dollars  for  the  additions 
to  and  betterment  in  the  plant,  and  provisions  have  been  made  to  take 
care  of  the  physical  and  financial  side  of  the  telephone  needs  of  the 
country  for  the  next  year,  the  year  following,  and  so  on,  and  when  the 
time  arrives  for  the  maturing  of  these  plans,  there  is  an  absolute  cer- 
tainty that  these  plans  will  be  followed  by  the  necessary  investment 
and  by  the  necessary  execution. 

31 


Familiar  Log-Roiling  Methods  of  Public  Enterprises 

Contrast  this  with  the  way  in  which  public  enterprises  are  financed 
in  this  country.  Congress,  upon  assembling  each  year  in  December,  re- 
ceives a  "Letter  from  the  Secretary  of  the  Treasury."  This  "letter"  is 
a  document  of  no  mean  bulk,  full  of  statistics  purporting  to  show  how 
much  money  the  government  will  have  to  spend  during  the  coming  year 
to  run  its  business.  The  document  is  technically  referred  to  as  the 
Annual  Estimates.  Now,  no  Congressman  imagines  for  a  minute  that 
these  estimates  represent  the  Secretary  of  the  Treasury's  mature  and 
deliberate  judgment  of  what  it  should  cost  to  run  the  Government  for 
the  coming  year.  Every  Congressman  knows  just  how  the  formidable 
array  of  statistics  presented  to  Congress  was  got  up.  He  knows  that 
the  imposing  tables  of  figures  were  prepared  by  the  various  depart- 
ments at  the  beginning  of  their  various  tasks  shortly  after  July  1st; 
that  the  bureaus  proceeded  solely  upon  the  basis  of  the  current  year  to 
guess  at  their  probable  needs  for  a  financial  year  which  was  not  to  be- 
gin for  twelve  months  to  come,  and  not  to  end  until  almost  two  cal- 
endar years  had  elapsed  after  the  time  when  the  work  on  the  estimates 
began.  He  knows,  what  is  more,  that  the  Secretary  of  the  Treasury 
has  practically  no  say  whatever  in  getting  up  the  estimates, — that,  for 
instance,  if  the  War  Department  should  multiply  or  divide  by  ten  its 
previous  estimate  for  river  and  harbor  expenditure,  the  Secretary  must 
remain  silent,  and  embody  the  estimate  in  his  "letter." 

Running  the  Appropriation  Gauntlet 

It  is  not  surprising,  therefore,  that  when  the  estimates  are  passed 
on  to  the  House  Appropriation  Committees,  they  are  treated  as  a  mere 
collection  of  guesses,  not  to  be  taken  seriously,  and  to  be  used  as  a 
guide — the  roughest  of  guides — only  when  political  considerations  are 
absent.  But  political  considerations  are  rarely  absent.  Only  too  often, 
when  the  needs  of  a  service  have  become  exceedingly  pressing,  special 
estimates  are  compiled  after  long  and  scientific  study,  after  laborious 
and  expensive  research,  to  be  lightly  tossed  aside  by  the  Appropri- 
ation Committee,  because  political  expediency  at  the  time  happens  to 
run  counter  to  the  needs  of  the  service.  But  this  is  not  all.  \Vhen  the 
nominal  needs  of  the  service  have  adventured  through  the  commit- 
tees and  are  presented  to  the  House,  they  are  subjected  to  the  fire  of 
new  influences,  new  opinions,  new  and  extended  possibilities  of  political 
pressure.  And  when,  in  their  modified,  battered  or  distorted  form,  they 
have  pased  through  the  House,  they  must  run  the  gauntlet  of  the  Sen- 
ate.   Then  the  Executive  approves  or  disapproves. 

The  results,  of  course,  are  natural.  Take  a  few  simple  illustrations 
— actual  occurrences  in  the  Post  Office  Department : 

A  printing  plant  in  Cincinnati,  Ohio,  belonging  to  the  City  Post 
Office,  shuts  up  shop.  There  is  plenty  of  work  on  hand  to  keep  it  busy. 
But  the  appropriation  happens  to  have  run  out.  Result :  No  work  for  a 
considerable  period — but  the  salaries  of  the  employees  run  on  as  usual, 
to  be  paid  months  later,  when  a  new  appropriation  can  be  secured. 

32 


Two  time-recording  docks  in  New  York  City,  belonging  to  the 
Post  Office  Department,  lie  idle  for  months.  Reason :  The  appropria- 
tion has  run  out.  Ten  dollars  would  probably  repair  the  clocks.  But 
not  a  cent  can  be  spent  on  the  clocks  until,  several  months  later,  an 
appropriation  can  be  secured. 

The  traveling  railway  mail  officials  charged  with  investigating  the 
postal  efficiency  in  the  various  parts  of  the  country  are  forced  to  stop 
work  before  the  close  of  the  year.  Reason:  The  appropriation  has  run 
out.  And  the  salaries  are  later  collected  by  the  officials  for  the  work 
they  didn't  and  couldn't  do. 

Uncertainty  of  Appropriation  Bills  Constant  Menace 

These  are  only  a  few  of  the  minor  illustrations  of  what  is  taking 
place,  on  a  vastly  larger  scale,  in  practically  every  Government  Depart- 
ment. Under  our  system  of  government,  a  small  majority  of  either 
house,  or  the  Executive,  may,  by  cutting  ofT  financial  support,  starve 
or  temporarily  paralyze  any  important  public  need.  Take  so  vital  a 
branch  of  government  activity  as  the  Federal  Civil  Service  Commission. 
Not  only  its  vigorous  administration,  but  its  very  existence,  is  being 
threatened  annually,  not  by  the  repeal  of  the  law  under  which  it  exists, 
— for  that  would  not  be  tolerated  by  the  sentiment  of  the  country, — 
but  by  a  small  crowd  in  one  house  temporarily  securing  sufficient  power 
to  jeopardize  its  fiscal  support.  It  takes  constant  lobbying  on  the  part 
of  its  friends  to  keep  it  from  this  form  of  submersion.  This  is  even 
true  of  State  Legislatures.  In  the  State  of  Colorado,  a  few  years  ago, 
the  Civil  Service  Commission  was  absolutely  abolished  by  a  failure  of 
the  Legislature  to  provide  the  necessary  appropriation.  The  recent 
failure  of  Congress  to  appropriate  money  for  the  Secretary  of  War 
with  which  to  equip  the  militia  with  artillery,  is  another  case  in  point. 
Picture  Mr.  Potter  going  down  to  Washington  and  pleading  with  the 
Government  for  a  new  telephone  office  on  the  assumption  that  he  is 
going  to  get  it,  and  the  Government  telling  him,  "No,  Mr.  Potter,  you 
will  have  to  wait  a  while,  because  the  program  for  this  year  is  five 
battleships." 

Why  only  recently  in  a  debate  in  Congress,  Mr.  Mapes  called  the 
attention  of  the  Chairman  to  the  deplorable  condition  existing  in  the 
Supervising  Architect's  Office,  as  a  result  of  this  financial  constriction 
which  obtains  in  our  fiscal  system.  I  quote  from  the  Congressional 
Record  of  April  7,  1914,  pp.  6807  S.: 

"Mr.  Mapes  :  Mr.  Chairman,  I  desire  to  call  attention  to  a  few  facts  in 
regard  to  the  work  of  the  Supervising  Architect's  Office.  The  question  of  the 
gentleman  from  New  York  is  answered  very  definitely  in  the  hearings — page 
106 — by  the  Supervising  Architect.  It  appears  from  the  hearings  that  the  office 
is  behind  from  five  to  six  years  in  its  v/ork.  It  takes  between  three  and  four 
years  from  the  time  a  building  is  authorized  before  the  Supervising  Architect's 
Office  can  even  begin  to  prepare  the  plans  and  it  takes  about  six  years  from 
the  authorization  of  the  building  before  the  building  is  completed. 

"The  appropriations  for  this  office  for  the  last  few  years  furnish  a  striking 
illustration  of  the  evil  effects  upon  the  public  service  of  penny-wise  and  pound- 
foolish  economy.  The  appropriation  bill  passed  in  1911,  after  our  friends  on 
the  other  side  of  the  aisle  got  control  of  the  House,  reduced  the  number  of 
employees  in  the  Supervising  Architect's  Office  by  66,  in  spite  of  the  fact  that 

33 


the  work  of  the  office  was  far  behind,  the  number  of  public  buildings  authorized 
was  steadily  increasing,  and  the  work  of  the  office  was  getting  more  and  more 
behind  as  time  went  on.  The  inauguration  of  the  parcel  post  made  it  necessary 
to  enlarge  old  post-office  buildings  and  to  build  new  ones.  The  Architect's 
force  should  have  been  increased  instead  of  decreased. 

"Since  that  time  the  office  has  continued  to  get  more  and  more  behind  in 
its  work,  until  now  it  is  practically  six  years  behind.  If  no  other  public  build- 
ings were  authorized,  it  would  take  six  years  for  that  office  to  catch  up  with 
the  work  already  assigned  to  it.  It  takes  from  three  to  four  years  from  the 
time  a  public  building  is  authorized  by  Congress  before  the  Supervising  Archi- 
tect's Office  can  even  commence  to  give  any  consideration  to  the  plans  for  it. 

"The  Supervising  Architect,  in  the  hearings  before  this  committee,  on  page 
106,  says : 

"  'The  public-buildings  act  approved  March  4,  1913,  gave  us  about  four 
years'  work  at  our  present  rate  of  progress.  We  will  not  commence  work  on 
that  bill  for  one  and  a  half  or  two  years.  You  might  say  that  we  have  five 
and  one-half  or  six  years'  work  ahead  of  us.' 

"Again,  he  says : 

"  'That  at  our  present  rate  of  progress  it  will  not  be  until  the  beginning  of 
the  calendar  year  of  1916  that  we  will  commence  work  on  the  public  buildings, 
act,  approved  March  4,  1913.' 

"The  Supervising  Architect  again,  on  page  107,  says : 

"  'We  find  that  our  clerical  force  available  for  the  administrative  work 
incident  to  the  construction  of  new  buildings  is  not  in  balance  with  the  tech- 
nical force.  *  *  *  It  seems  unwise  to  have  so  many  buildings  under  construc- 
tion when  we  are  unable  to  handle  the  enormous  correspondence  and  adminis- 
trative work  which  naturally  follows.  Letters  accumulate  for  two  or  three 
weeks  before  they  receive  attention  and  the  work  of  construction  is  delayed ; 
there  is  complaint  all  along  the  line,  and  we  are  criticized  on  the  floor  of  the 
House.  However,  it  is  a  condition  that  we  cannot  ameliorate  under  existing 
circumstances  unless  you  can  help  us  by  this  balancing  of  the  force.' 

"There  is  not  a  man  here  who  would  tolerate  a  system  in  his  private 
business  that  made  it  necessary  to  hold  up  the  progress  of  building  operations 
for  two  or  three  weeks,  as  testified  to  by  the  Supervising  Architect,  on  account 
of  not  having  enough  help  to  answer  the  correspondence  promptly.  It  is  un- 
businesslike and  wasteful  in  the  extreme  to  allow  such  a  condition  of  affairs 
to  exist.    . 

"The  distinguished  chairman  of  the  Committee  on  Public  Buildings  and 
Grounds,  the  gentleman  from  Florida  (Mr.  Clark),  in  a  speech  on  the  floor 
of  the  House  on  February  20  of  this  year,  page  3985  of  the  Record,  corroborates 
the  statement  of  the  Supervising  Architect.  *  ♦  ♦ 

"  'There  is  probably  not  a  Member  upon  this  floor  who  has  been  here  for 
six  years  or  more,  unless  he  represents  a  district  in  one  of  our  large  cities, 
who  has  not  a  building  authorized  for  his  district  which  has  been  pending  for 
three  or  four  years  and  which  to-day  appears  no  nearer  being  built  than  it 
did  the  day  the  bill  which  provided  for  it  passed  Congress.  Under  the  methods 
obtaining,  after  a  building  is  authorized,  the  patience  of  the  community  is  worn 
threadbare  before  construction  on  the  foundation  is  begun.  In  one  place  in 
my  district,  vyhere  I  secured  an  authorization  for  a  post-office  building,  some 
of  the  older  inhabitants  are  beginning  to  date  things  back  to  "the  time  when 
Qark  got  a  building  for  us,"  and  yet  not  a  shovel  of  dirt  has  been  thrown 
toward  preparing  for  the  foundation.' 

~l  ao  not  know  hoiv  tar  back  into  aricient  history  the  act  w««  passed  au- 
thorizing the  public  building  in  his  district  to  which  the  distinguished  chairman 
of  the  Committee  on  Public  Buildings  and  Grounds  refers,  but  he  has  described 
a  situation  that  exists  all  over  the  country,  and  yet  the  Supervising  Architect's 
Office  is  obliged  to  get  along  with  an  inadequate  force.  The  work  continues 
to  pile  up  and  the  public  service  continues  to  suffer." 

34 


Troubles  of  Foreign  Governments 

Nor  is  this  condition  peculiar  to  the  United  States.  We  find  pre- 
cisely the  same  principle  operating  in  every  foreign  government.  Take 
France,  for  example.  The  head  of  the  telephone  service  will  submit 
to  the  Chamber  of  Deputies  a  hundred  chapters  of  minute  and  elab- 
orate statistics.  "We  must  have  so  and  so  many  francs  for  construc- 
tion and  improvement,  or  the  telephone  service  will  continue  to  deteri- 
orate." The  appropriating  body  will  receive  the  demand,  and  with  it, 
perhaps,  hundreds  of  chapters  of  statistics  from  other  departments. 
Nearly  800  chapters  are  sometimes  submitted  by  the  twelve  ministers 
who  constitute  the  department  heads  in  France.  The  Budget  Com- 
mittee is  literally  swamped  with  statistics.  Even  if  the  members  were 
entirely  free  from  political  considerations,  they  could  not  possibly 
frame  a  proper  business  judgment  on  the  needs  of  each  service.  The 
outcome  is  only  natural.  The  telephone  administration  may  ask  for 
an  appropriation  of  a  hundred  million  francs  to  carry  out  a  wise  plan 
of  construction  and  equipment,  which  would  result  in  annual  economies 
and  bring  the  telephone  service  up  to  the  requirements  of  the  public. 
The  call  is  simple :  "A  stitch  in  time,  to  save  ninety  and  nine."  But 
if  the  appropriation  body  considers  it  better,  politically,  to  expend 
money  for  warships,  or  waterways,  or  public  buildings,  the  telephone 
budget  will  be  cut  in  two,  and  the  Telephone  Department  must  shift  as 
best  it  can  on  "short  rations."  This  may  mean  no  rations  at  all,  for  a 
hundred  millions  may  be  an  absolute  minimum,  without  the  expenditure 
of  which  the  proposed  construction  would  be  useless.  Year  in  and 
year  out,  the  official  Budget  Reporter  calls  attention  to  this  fatal  gap 
between  the  public  purse  and  the  public  plant,  and  efforts  have  been 
made  in  the  past  to  beseech  the  Chambers  of  Commerce  to  supply  the 
needed  investment,  because  the  money  could  not  be  obtained  in  time  or 
at  all,  from  the  Government. 

A  striking  example  of  the  results  of  this  policy  is  furnished  by  the 
case  of  the  Gutenberg  Exchange,  Paris.  After  a  dozen  years  of  tele- 
phone stagnation — during  which  period  there  were  years  in  which  no 
telephone  appropriations  were  made  at  all,  and  years  when  appropri- 
ations were  so  large  that  they  could  not  be  used  before  they  were  with- 
drawn— the  Government  installed  the  "common  battery"  system  in  the 
Gutenberg  Exchange.  This  system  had  long  since  been  adopted  in 
America,  but  in  France  it  was  still  regarded  as  a  new  improvement. 
No  sooner  was  the  system  installed,  than  the  French  Government  was 
warned  that  unless  it  provided  connections  of  greater  electrical  capa- 
city, it  would  have  trouble  from  the  higher  voltage.  But  the  warning 
fell  on  deaf  ears.  The  Government  felt  that  it  had  spent  enough.  The 
result  was  a  conflagration,  which  completely  reduced  the  exchange  to 
junk  and  ashes,  and  left  a  large  section  of  the  city  stranded  without 
telephone  communication. 

It  will  be  seen,  therefore,  that  some  radical  change  in  our  method 
of  financing  public  enterprises — not  to  be  accomplished  in  one  day  or 
one  year — is  necessary,  before  we  can  hope,  in  the  management  of  our 
Post  Office  Department — to  approach  the  efficiency  and  service  af- 

35 


forded  by  private  enterprise ;  some  reform  which  will  insure  a  complete 
freedom  from  the  gusts  of  opposing  policies — political  or  otherwise — 
some  system  which  will  provide  a  reasonable  guaranty  that  deliberate 
and  painstaking  planning  will  be  followed  by  equally  deliberate  and 
painstaking  execution. 

American  Optimism  Would  Not  Save  Us  from  Fate  of  Europe 

Of  course,  we  quite  naturally  must  take  a  great  deal  of  pride  in  the 
achievements  of  American  industry  (the  unfortunate  exception  being 
the  advocates  of  Government  ownership),  and,  when  looking  at  our 
telephone  development,  it  may  be  that  some  will  say  that  if  this  Gov- 
ernment undertakes  an  enterprise  of  this  kind  we  can  avoid,  by  experi- 
ence, the  pitfalls  of  foreign  nations.  However,  to  steer  clear  of  this 
erroneous  assumption,  we  only  have  to  consider  the  wonderful  progress 
which  European  nations  have  made  in  what  everyone  concedes  to  be 
purely  governmental  enterprises.  Take  the  road-building  of  France, 
Germany,  England,  the  canal  construction,  town  planning,  magnificent 
public  buildings,  drainage,  etc.,  which  have  served  as  models  for  many 
of  our  State  and  municipal  enterprises  in  this  country.  Consider  the 
unfortunate  experience  in  this  country  in  similar  undertakings,  with 
charges  of  inefficiency,  graft,  etc.,  notably  the  canal  and  road-building, 
without  mentioning  any  State.  We  thus  see  that,  where  the  govern- 
ments abroad  have  confined  their  efforts  to  governmental  functions  we 
may  learn  much  from  them,  but  where  they  have  departed  from  that 
field  and  entered  fields  of  private  enterprise,  they  have  dismally  failed 
where  we,  retaining  private  management,  have  magnificently  succeeded. 

An  Earnest  Appeal  to  Mr.  Lewis 

In  order  that  this  and  similar  discussions  may  prove  of  some  con- 
structive value,  I  want  to  make  an  appeal  to  Mr.  Lewis  and  his  friends. 
Certainly,  neither  he  nor  any  other  right-thinking  person,  after  con- 
sidering what  we  have  been  discussing,  would  wish  to  plunge  the  coun- 
try into  an  experiment  which,  if  it  should  fail,  would  cripple  the  busi- 
ness interests  and  practically  destroy  any  hope  of  a  continuation  of  our 
magnificent  growth.  To  remove,  so  far  as  possible,  any  element  of 
danger,  will  they  not  at  once  start  a  movement  for  the  establishment  of 
efficient  business  in  the  Government  service?  Will  they  not  do  the  very 
self-evident  and  proper  thing;  compel  the  adoption  by  the  govern- 
mental departments  of  adequate  and  modern  means  of  accounting  so 
that  every  item  of  expense  and  income  may  have  its  proper  place  and 
be  considered  in  determining  the  relative  efficiency  of  departments  one 
with  the  other,  or  with  similar  departments  elsewhere?  Will  they  not 
actively  start  a  campaign  to  bring  stability  into  the  organization  which 
has  charge  of  our  enormous  governmental  undertakings?  Will  they 
not  try  to  make  merit  alone  a  determining  factor  in  promoting  new 
officials  and  retaining  old  ones? 

In  doing  this,  they  will  have  the  support  of  every  conservative  per- 
son and  interest  in  the  country,  particularly  organizations  such  as  the 

36 


Providence  Economic  Club  and  the  Merchants'  Association  of  New 
York,  which,  at  present,  occupies  a  peculiar  position.  That  organiza- 
tion was  foremost  in  its  determination  to  secure  a  revision  in  the 
express  rates,  and,  under  our  magnificent  plan  of  governmental  con- 
trol, secured  relief  for  the  business  interests  of  the  country  in  the  pro- 
mulgation by  the  Interstate  Commerce  Commission  of  a  new  rate 
schedule  and  zone  system.  That  same  organization  was  strong  in  its 
support  of  Mr.  Lewis  and  others  in  connection  with  the  adoption  by 
the  Government  of  the  parcels  post  feature  of  our  postal  system.  They 
readily  recognized  the  proper  place  for  this  new  and  valuable  service. 
But  that  same  organization  is  to-day  waging  an  active  fight  to  prevent 
the  absolute  destruction  of  the  express  system, — a  service  which  is 
needed  by  every  business  interest  in  the  country.  That  same  organi- 
zation is  to-day  waging  this  same  campaign  which  we  are  asking  Mr. 
Lewis,  with  his  great  ability,  to  father,  namely,  one  which  will  result 
in  the  elimination  of  ignorance  and  guess  in  measuring  the  true  results 
of  postal  operations,  whereby  the  service  may  be  reconstructed  and 
placed  upon  a  modem  and  efficient  basis. 


The  Time  to  Seriously  Consider  the  Question 

When  Mr.  Lewis  and  his  friends  have  brought  about  the  result 
that  the  Post  Office  Department  of  this  country  is  managed  on  an 
economical  and  scientific  basis ;  when  the  Postmaster-General  is  secure 
in  his  tenure,  so  long  as  he  is  efficient  and  active ;  when  his  subordinates 
are  appointed  solely  on  account  of  ability;  when  they  are  retained  and 
promoted  as  a  reward  for  faithful  service;  when  the  Government  has 
adopted  a  fair  and  equitable  scheme  of  pension  and  benefits  for  its 
employees;  and  when  the  Government  has  brought  about  a  condition 
where  appropriations  are  made  the  result  of  careful  and  conscientious 
study  by  its  officers,  and  not,  as  at  present,  made  a  football  for  am- 
bitious and  unscrupulous  politicians,  subject  to  all  of  the  evils  of  log- 
rolling and  political  bickering, — then,  I  say,  and  not  until  then,  will  we 
be  in  a  position  for  a  proper  and  judicious  discussion  of  the  effect  of 
so  radical  a  movement  as  Mr.  Lewis  proposes.  At  that  time  we,  as 
employees,  will  have  no  objection  to  the  serious  consideration  of  such 
a  question,  perfectly  secure  in  the  thought  that  this  service,  the  thing 
we  are  all  striving  for,  will  be  reasonably  safe. 


President  Wilson's  Conservative  Position 

As  showing  that  the  task  I  am  asking  Mr.  Lewis  and  his  friends 
to  assume  is  worthy  of  his  mettle,  I  want  to  quote  from  President 
Woodrow  Wilson,  in  his  work,  "The  State": 

"But  the  proposition  that  the  government  should  control  such  dominating 
organizations  of  capital  may  by  no  means  be  wrested  to  mean  by  any  necessary 
implication  that  the  government  should  itself  administer  those  instrumentalities 
of  economic  action,  which  cannot  be  used  except  as  monopolies.  Government 
regulation  may  in  most  cases  suffice.     Indeed,  such  are  the  difficulties  in  the 

37 


way  of  establishing  and  maintaining  careful  business  management  on  the  part 
of  the  government  that  control  ought  to  be  preferred  to  direct  administration 
in  as  many  cases  as  possible — in  every  case  in  which  control  without  adminis- 
tration can  be  made  effectual." 

I  feel  confident  that  the  "difficulties  in  the  way  of  establishing  and 
maintaining  careful  business  management  on  the  pait  of  the  Govern- 
ment" will  not  prevent  our  good  friend  Mr.  Lewis  from  tackling  the 
problem,  and  I  wish  to  say  that  if  he  is  a  big  enough  man,  should  he 
fail  in  his  eflForts  to  establish  proper  business  management  on  behalf 
of  the  department  to  which  he  wishes  to  entrust  the  future  of  this  im- 
portant industr)',  he  would  undoubtedly  be  the  first  to  demand  that 
further  attempts  at  extending  the  functions  of  the  Post  Office  Depart- 
ment be  suspended  until,  with  the  support  of  some  new  movement, 
there  is  first  established  such  efficiency  in  management  on  the  part  of 
the  Government  as  will  insure  continuance  of  "good  service" — the 
thing  which  alone  counts.    Gentlemen,  I  thank  you. 


31 


^7  f 


^    J   JSuThL 


■jj>pi 


-^ 


TELEPHONE  &  TELEGRAPH  STATISTICS  OF  THE  WORLD 


JANUARY  1,  1913 


CONTENTS 

1.  Stations — Telephone 

2.  Wire  Mileage— Telephone  and  Telegraph 

3.  Gross  Earning:s — Telephone  and  Telegraph 

4.  Investment — Telephone 

5.  Traffic — Mail,  Telephone  and  Telegraph  in  Europe  and  the  United  States 

6.  Telephone  Development  of  each  City  in  Europe  with  over  500,000  Population 

7.  Telephone  Development — Urban  and  Rural— in  Europe  and  the  United  States 


Note:     For  the  completeness  of  these  statistics  we  are  Indebted  to  foreign  governments,  private  companies  and  the  (J.  S.  Census 
Bureau.     To  them  much  appreciation  and  thanks  are  due. 


BULLETIN   No.  2 

Issued  April,  1914 

(Supplementtng  and  bringing  up  to  date  some 
data  previously  appearing  in  "Telephone  Sta- 
tistics of  the  World"  (Bulletin  No.  1]  issued 
May    I.    1912) 


AMERICAN    TELEPHONE    AND  TELEGRAPH   CO. 
OFFICE  OF  STATISTICIAN 


i 

[eleplione  Stations  ot 

January 

[lie  Word, 

1,    1913 

by  Countries 

1 

1 

NORTH    AMERICA: 

United   States    

Number  of  Stations                          ' 

1 

Government 

Private 

Total 

Per  uent.            stations 
of  Total                 per  100 
World             Population 

64.32"".      1              9.1 

3.19';                    5.6 

.05';                       .1 

.29-:;                 .2 

per 
Square  Mile 

8.729. 592t 

8,729,592+ 

431,052 

7,183 

39.290 

1,406 

12.000 
3,195 
6,158 

31. 

Canada    (incl.    Xcwfoundlaiid). . 
Central    America*    

85,664           1            345.388 
2,970           !                 4.213 
1,319                          37.971 

2. 

26. 

Mexico*    

19. 

Other   N.   A.   Places* 

1,832 

1.406 

12.000 
3,195 
4,326 

.01% 

2.0 

.1 

West   Indies: 

.09% 
.02% 
.04% 

.5 
.3 
.1 

50. 

310. 

Other  W.  1.  Places* 

116. 

Total 

91,785 

9,138,091 

9,229,876 

68.01% 

6.9 

15. 

SOUTH   AMERICA: 

63.747 

63,747 

2.500 

24.000 

26,000 

1.800 

2.700 

490 

4,000 

9,485 

4,647 

1.385 

.47% 
.02% 
.18% 
.19% 
.01% 
.02% 

.03% 
.07% 
.04% 
.01% 

.9 

.1 

.1 

.7 

.4 

.2 

.06 

.09 

.8 

.2 

.3 

6.3 

Bolivia*    

—  2.500 
1.095                          22,905 

—  26.000 

—  1.800 
380                             2.320 

—  490 

—  4.000 

3.2 

Brazil*     

6.7 

Chili*   

12.0 

11.6 

13.0 

4.6 

Peru*       

6.6          \: 

Uruguay     

9.485 

15.4            : 

428 
1,365 

4,219 

6.9             1 
2.6 

Other  Places*    

Total 

EUROPE: 

3,268 

137,466 

140,734 

1.04% 

.3 

7.0           1 

161.230 

58.640 

850 

3.200 

1,467 

293,195 

1.302.672 

738.738 

3.097 

116,931 
35,200 

161,230 

58.640 

850 

3.200 

118.398 

35.200 

293,195 

1,302.672 

738.738 

3  097 

75.733 

89.166 

3.910 

77.195 

75.000 

8.040 

21.000 

282.481 

3.606 

34.000 

217,554 

90,573 

1,880 

1.19% 
.43% 
.01% 
.02% 
.87% 
.26% 
2.16% 
9.60% 
5.44% 
.02% 
.56% 
.66% 
.03% 
.57% 
.55% 
.06% 

.5 
.8 

.04 

.07 
4.2 
1.1 

.7 
1.9 
1.6 

.1 

.4 

.2 
1.5 
1.3 
3.1 

.1 

251. 

Belgium      

666. 

Bosnia*     

105. 

119. 

Denmark    (March    31.    1913) 

188. 
22. 

191. 

German    Empire   

319.              ! 

Great  Britain  (March  31.  1913). 

379. 
107. 

Hungary     

75.738                                  — 
57.623                          31,473 

3,910                                — 
54.603                        22,592 
38.000                        37.000 

1.172                           6.868 
21.000                                — 
121.076                       161,405 

3.606                                — 

1.700                        32.300 
148.372                        69.182 

169. 

Italy    (  liinc    30.    1912) 

315. 

265. 

476. 

19. 

Portugal     

156. 

.16%      I                .3 

143. 

2.09% 

.2 

69. 

.03% 

.25% 

1.60% 

.66% 

.1 

.2 
3.9 
2.3 

.03 

161. 

Spain*     

100. 

32. 

90.573 

1,880 

240. 

Other  Places*   

60. 

Total 

3,180,532 

514,831 

3,695,363 

27.23%                      .8 

119. 

ASIA: 

British    India    

5,731 

8,227 

198,435 

20,400 

9.795 
9.546 

5,872 

15,526 

17,773 

198,435 

26,272 

.11% 

.13% 

1.46% 

.20% 

.007 
.004 
.4 
.01 

222. 

China*     

265. 

Japan    (March    Jl.    1913) 

Other   Places*    

353. 
16. 

Total 

232,793 

25,213 

258,006 

1.90% 

.3 

B7. 

AFRICA: 

3.098 
24.393 
16.311 

12,998 

16,096 
24,393 
16,311 

.12% 
.18% 
.12% 

.1 
.4 
.01 

28. 
12. 
11.             1 

Union    of    South    Africa 

Total 

OCEANIA: 

Australia      , 

43,802 

121.020 
9,536 

12,998 

56.800 

.42% 

.04 

12.            || 

3,186 
6047 

121.020 

12.722 

6.047 

42.934 

5.974 

1,398 

.89% 
.09% 
.05% 
.32% 
.04% 
.01% 

2.6 
.03 

3.1 

4.0 
.07 
.06 

1.5 

64. 

Hawaii    

29. 

New  Zealand    ( Mch.  31,  1913).. 
Philippine   Islands*   

42.934                                  — 
1.500                          4.474 
1,368                                3D 

10. 
67. 

5. 

Total 

176,358 

13,737 

190,096 

1.40% 

M 

13. 

Total  World 

3.728,538 

9,842,336 

13,570,874      , 

100.     % 

1 ll 

*Partly  estimated 
+U.  S.  Census,  1912 


2— Telephone  and  Talegrapti  Wire  of  the  World,  by  Countries 


Januciry     I,     1913 


NORTH    AMERICA: 


United  States  P. 

Canada     uiul.     NcwfounUlaiidi.  P.  G. 

Central    America"    P.  G. 

Mexico*     P.O. 

Other  N.  A.  Places* |  P.  G. 

West    Indies: 

Cuba     P, 

Porto  Rico  P 

Other  W.   I.  Places* P.  G, 


Miles  of  Telephone  Wire 


Opsntad 

by 


Total. 


SOUTH   AMERICA: 


Argentine   .... 

Bolivia*   

Brazil*  

Chill*    

Colombia*  ... 
Ecuador*  .... 
Paraguay    .... 

Peru*    

Uruguay    

Venezuela* 
Other  Places* 


Total. 


EUROPE: 


Austria    

Belgium     

Bosnia*    

Bulgaria*    

Denmark    (March  Jl.   1913) 

France   

German    Empire    

Great   Britain   iMarch  Jl.  19U) 

Greece    

Hungary    

Italy    I  June    30.    191.')* 

Luxemburg    

Netherlands     

Norway*   

Portugal    

Roumanla*   

Russia    and    Finland* 

Servia     

Spain*    

Sweden    

Switzerland    

Other    Places*    


P. 

P. 
P.  G. 

P. 

P. 
P.  G. 

P. 

P. 

P. 
P.  G. 

G. 


Number 
of  Miles 


20,248,326f 

»10,236 

15,605 

95,375 

1,940 


Per  Cent, 
of  Total 
World 


60.83'- 

2.74' 

.05' 

.29'^ 


35,719 

3,213 

13,347 


21,323,761 


184,442 

1,500 

40,000 

40.000 

1.800 

2,200 

342 

10.557 

20,789 

11.178 

2,830 


.10% 
.01% 
.04% 


64.11% 


.55% 

.12% 
.12% 
.01% 
.01% 

.03% 
.07% 
.03% 
.01% 


315,638 


.95% 


Total. 


ASIA: 


British    India    

China*    

Japan   (March  31.  19IJ). 
Other   Places*    


Total 


AFRICA: 


Egypt     

Union   of   South    Africa. 
Other    Places*    


Total 


OCEANIA: 


Australia     

Dutch    East    Indies. 

Hawaii*     

New   Zealand    (Mch. 


19I3)» 


Phillpi 
other 


Places* 


Total. 


G. 

G. 

G. 

G. 
P.  G. 

G. 

G. 

G. 

G. 

G. 
P.  G. 

G. 
P.  G. 
P.  G. 
P.  G. 

G. 
P.  G. 

G. 
P.  G. 
P.  G. 

G. 

P. 


P.  G. 

P.  G. 

G. 

P.  G. 


P.  G. 
G. 
G. 


G. 
P.  G. 

P. 

O. 
P.  Q. 
P.  O. 


321,645 

185.349 

2,300 

8,000 

303,816 

1.060,052 

4,175,782 

2.360,000 

5,368 

252,751 

194,000 

3.950 

193,308 

160,000 

28.736 

55.000 

434.000 

6  956 

68.000 

279.312 

234.280 

2.499 

10,334,804 


.97% 
.56% 
.01 7o 
.02T„ 
.91% 

3.19'b 
12.56'-c 

7.09 'o 
.02% 
.76% 
.58% 
.01% 
.58% 
.48% 
.09% 
.16% 

1.31% 
.02% 
.20% 
.84% 
.70% 
.01% 


31.07% 


24.166 

35,000 

485,982 

60,876 


606.024 


58.689 
68.997 
30.212 


MTJBM 


.07% 

.11% 

1.46% 

.18% 


1.82" 


.18% 
.21% 
.09% 


.48% 


372.011 
47.639 
12,000 
64,600 
24.400 
3.159 


1.12'-; 
.U'7,. 
.04-,. 
.19'- 
.07^^ 
.01-; 


Total    World. 


523,809 


33.261.934 


1.57% 


100.     % 


Per  100 
Population 


21.03 

11.9 

.3 

.6 

2.8 


Miles  of  Telegraph   Wire  (Spo  Note) 


Number 
of  Mllei 


Per  Cent. 

of  Total 

World 


1.6 
.3 
.3 


1.814.196t 

195.825 

16,110 

49,169 

1,064 

6.312 

631 

2,512 


16.0 


2.085,819 


2.6 

.07 

.2 
1.1 

.03 

.1 

.04 

.2 
1.9 

.4 

.6 


1.1 

2.4 

.1 

.2 

10.9 

2.7 

6.3 

5.1 

.2 

1.2 

.6 

1.5 

3.2 

6.6 

.5 

.8 

.3 

.2 

.3 

4.9 

6.1 

.03 


2.3 


.01 
.01 
.9 
.03 


.06 


.5 
IJi 
M 


128.743 

5.998 

37.786 

22.334 

11.280 

3.316 

2.632 

6.494 

5.884 

4.920 

725 


230,112 


97,880 

27.563 

4,700 

9.450 

8.076 

387,917 

434,818 

310.872 

9.864 

95.511 

129.425 

712 

23,749 

13.799 

14.062 

13.500 

315  000 

5.188 

54.600 

20,161 

16,476 

2,S4« 


1,995.869 


291.765 
51.136 

122.968 
92,701 


558,570 


13,316 
56,860 
107,571 


177.747 


8.0 

.1 

6.2 

6.0 

.3 

.1 


101.218 

15.874 

0 

24,297 

5,595 

1,790 


1,0 


1.9 


148,774 

5,196,891 


34.91% 

3.77% 

•  31% 

.95% 

.02% 

.12% 
.01% 
.05% 


Per  100 
Population 


40.14% 


2.48% 

.12% 
•  73% 
.43% 
.22% 
•067.. 
.05% 
.12% 
.11% 
.10% 
.01% 


4.43% 


1.89% 

.53% 

.09% 

.187<, 

.157o 

7.467o 

8.377o 

5.98  7<, 

.197o 

1.847i, 

2.49% 

.01% 

.46% 

.267<, 

.27  7<, 

.26% 

6.06% 

.10% 

1.057o 

.39% 

.32% 

.05% 


1.9 

2.5 

.3 

.3 
1.5 

.3 

.06 

.05 


1.6 


1.8 
Jt 
.2 
.6 
.2 
.2 
.3 
.1 
.5 
.2 
.2 


38.40% 


5.62% 

.98% 

2.37% 

1.78% 


.3 
.4 
J! 
.2 
.3 
1.0 
.7 
.7 
.4 
.4 
.4 
.3 
.4 
.5 
.3 
.2 
.2 
.2 
.3 
.4 
.4 
.04 


.1 
.01 

.2 
.04 


10.75% 


.26% 
1.09% 
2.07% 


3.42% 


1.96% 
.81% 
.00% 
.47% 
.10% 
.08% 


.06 


.1 
.9 
.09 


2.86% 


100. 


2.2 

.04 

.0 
2.3 

.06 

.08 


.3 
.3 


Note:    Telegraph  Is  operated  by  Government,  except  In  the  United  States. 


p. — Priv.ite  Companies 

G. — Government 

G. — Private   Companies  and   Government 


♦U.  S.  Census.  1912 
*Partly   Estimated 


3— Telephone  and  Telegraph  Gross  Earnings  of  the  World,  by  Countries 


(nearest  fiscal  period — YEAR   IBI2) 


NORTH    AMERICA: 


States    

(incl.    Newfoundland). 
America    


United 
Canada 
Central 

Mexico   

Other    N.    A.    Places. 
West    Indies: 

Cuba    

Porto   Rico   

Other  W.   I.   Places 


Telephone 


Annual  Gross  Earnings 

(I'arily   Estimated) 


Telegraph 
(Set  Note) 


pp«jW| 


Total. 


1     SOUTH    AMERICA: 


Argentine    . .  . 

Bolivia    

Brazil     

Chill     

Colombia 
Ecuador     .... 
Paraguay    ... 

Peru    

Uruguay    . . . . 
Venezuela 
Other  Places 


Total 


EUROPE: 


Austria     

Belgium     

Bosnia    

Bulgaria    

Denmark     

France    

German  Emplie 

Great   Britain    

Greece    

Hungary    

Italy    

Luxemburg    

Netherlands     

Norway    

Portugal    

Roumania     

Russia    and    rinland. 

Servia     

Spain    

Sweden    

Switzerland      

Other    Places    


P.  G. 
P.  G. 
P.  G. 
P.  G. 

P. 
P. 
P.  G.  , 


$232,172,000» 

13.268.000 

428.000 

1,198,000 

56.000 


P. 

P. 
P.  G. 

P. 

P. 
P.  G. 

P. 

P. 

P. 
P.  G. 

G. 


$298,219,000 


2,735,000 

75.000 

960.000 

780  000 

54.000 

54.000 

19.000 

120.000 

500.000 

236.000 

41,000 


9    5,574,000 


5,663,000 

111.000 

3,357.000 

558.000 

364,000 

78.000 

35.000 

137.000 

143.000 

62.000 

18,000 


$10,526,000 


8.398.000 

186,000 

4,317,000 

1.338.000 

418.000 

132.000 

54.000 

257,000 

643,000 

298,000 

59,000 


$  16,100,000 


1    P. 

P. 
P. 
P. 


Total. 


ASIA: 


British  India  . 

China     

Japan    

Other    Places 


AFRICA 


P.  G. 

P.  G. 

G. 

P.  G. 


Egypt 

Union  of  South  Africa 

Other    Places 


OCEAN 

Australia 

Dutch    East 

H.iwail 

New   Zealand 

Philippine    Islands 

Other    Places 


Total 


Total   Worl4.. 


:-JL_ 


;     5,110,500 

2,892.400 

27.700 

122.400 

2,759,700 

11,707,500 

44.481,400 

28,000,000 

45,800 

2.929,900 

2,906,200 

81.900 

2.542,300 

1.523.900 

324,500 

414.000 

8.873,500 

111.300 

1.417.200 

4,900,900 

2,657.900 

37,600 


«123,868,500 


729.700 

560.200 

6.206,400 

994.000 


$     8,490,300 


$        756,500 

1,247,400 

652,400 


%     2,656,300 


%     3,657,300 

525.000 

302,000 

1,288,000 

258,800 

42,000 

f     6,073,100 


$444,881,200 


$  3,660,000 

1,408.700 

184.500 

333.000 

561,900 

9,869,500 

10.514.000 

15,393.600 

431.000 

2,025.300 

5,253.000 

22.600 

1,085,600 

780,500 

700.000 

706,700 

16,189,600 

171,800 

2,124,400 

727,000 

912,400 

76,000 


$73,131,100 


4.902.500 
4.969.000 
4.169,000 
3,743,800 


$17,784,300 


$  718.800 
1.875.900 
1.624,700 


$  4,219.400 


$  3.796.100 
731.800 

1.525.800 

236  600 

23.000 

$  6.313.300 


$173,218,100 


1     8.770,500 

4,301,100 

212,200 

455,400 

3,321,600 

21,577.000 

54,995.400 

43,393,600 

476.800 

4.955,200 

8.159.200 

104,500 

3.627.900 

2,304.400 

1,024,500 

1,120,700 

25.063,100 

283,100 

3,541.600 

5.627.900 

3,570.300 

113.600 


$196,999,600 


5,632,200 

5,529.200 

10.375.400 

4.737,800 


$ 

26,274.600 

$ 

1.475,300 
3.123.300 
2.277.100 

Note;     Telegraph   Is  operated  by  Governments,  except  In  the  United   States. 


32.6% 
40.3% 
22.3% 
58.3% 
12.9% 
41.0^» 
35.2% 
46.7% 
77.8% 
79.2% 
69.5% 


34.6% 


58.3% 
67.2% 

13.2,,, 
26.870 
83.1% 
54.3% 
80.9% 
64.5% 
9.6% 
59.1% 
35.6'; 
78.4'-c 

70.1  7 

66.2  1 
31.6'c 
37.0% 
35.4% 
39.2  "r 
40.0'-c 
87.1% 
74.4% 
33.3% 


62.9% 


10.1' 
59.8' 
21.0', 


32.3% 


51.2% 
39.9'; 
28.6',; 


67.4% 
59.7% 
77.7% 
41.7% 
87.1 7o 
59.07o 
64.8% 
53.3% 
22.2% 
20.8% 
30.5% 


65.4% 


41.7% 
32.8% 

73.2% 
16.9% 
45.7% 
19.1% 
35.5% 
90.4% 
40.9% 
64.4% 
21.6% 
29.9% 
33.8% 
68.4% 
63.0% 
64.6% 
60.8% 
60.0% 
12.9% 
25.6% 
68.7% 


37.1% 


87.0% 
89.9% 
40.2% 
79.0% 


67.7'- 


48.8% 
60.1% 
71.4% 


$44.20 
33.30 
42.40 
30.90 
30.90 
20.60 
45.20 
30.80 
53.50 
51.20 
31.40 


$41.00 


$33.60 
52.20 

33.50 
40.60 
24.50 
42.20 
35.80 
38.90 
15.50 
40.90 
34.00 
21.90 
34.30 
20.60 
42.80 
20.50 
30.30 
31.50 
43.20 
23,40 
30.40 
21.10 


$35.10 


$50.60 
35.10 
34.70 
39.40 


$36.20 


$48.80 
55.40 
43.30 


$     6,875.700 

38.6% 

61.4%          I 

$50.00                    r 

$     7,453,400 

49,1% 

il 
50.9% 

$32.10 

1,256,800 

41.8'-„ 

58.2% 

44.40 

302,000 

lOO.O'l 

50.30            1 

2,813,800 

45.8% 

54.2% 

32.10 

495,400 

52.3^; 

47.7% 

44.40 

65,000 

64.6--. 

35.4% 

33.80 

$  12,386.400 

49.0% 

51.0% 

$34.00 

$618,099,300 

72.0% 

28J>%        1 

$33.90 

P. — Private   Companies 
G. — Government 
P.  G. — Private   Companies  and   Government 


'Partly  estimated  to  Include  ALL  companies  and  lines 
tU.   S.   Census.   1912 


4— Telephone  Investment  of  tlii 

January    1, 

3  Wor 

1913 

d,  by  Countrie 

s 

{  NORTH   AMERICA: 

United  States  

Optraltd 

by 

Investment 

(Partly  cslimalcJ) 

Per  Cent. 

of  Total 

World 

Investment 

per 

Station 

p. 

p.  G. 
p.  G. 
p.  G. 
p.  G. 

p. 

P. 

P.  G. 

$1,094.800.000« 

58,984,000 

1,000,000 

5,264.000 

190,000 

10,908,000 
513,000 
954,000 

57.44% 

3.09% 

.05% 

.27% 

.01 7o 

.58% 
.03% 
.05% 

1125 
137             1 
139 
134 
135 

909 
160 
155 

Canad.1    (unci.    Newfoundland) 

Central   America      

Mexico                                                        

West  Indies: 

Other   West   Indies   Places                        

,                        Total                                                                              

$1,172,613,000 

61.52% 

»127 

SOUTH    AMERICA: 
Argentine                                                                         

P. 

P. 
P.  G. 

P. 

P. 
P.  G. 

P. 

P. 

P. 
P.  G. 

G. 

$       14,769,000 

375,000 
3,800,000 
3,732,000 

398.000 

1.270,000 

/8,000 

539,000 
1,585,000 
1.299,000 

137,000 

.77% 
.02% 

.20-; 
.20'; 
.02% 
.07% 

.03% 
.08% 
.07% 
.01% 

«232 
150 
160 
144 
221 
470 
160 
135 
167 
279 
100             1 

Bolivia        ...    .        

Brazil     

Chill    

Ecuador    .                              .            

Venezuela                                 

$      27,982,000 

1.47% 

»199 

'  EUROPE: 

G. 
G. 
G. 
G. 
P.G. 

G. 
G. 

t 

G. 
P.  G. 

G. 
P.  G. 
P.  G. 
P.  G. 

G. 
P.  G. 

G. 
P.  G. 
P.  G. 

G. 

P. 

$      34,000,000 

16,163,000 

300,000 

585.000 

11,982.00(1 

2.820.000 

75.380.000 

232,537.000 

131.309,000 

542,000 

14,580,000 

12,600,000 

689  000 

12.690.000 

7.218.000 

1.235.000 

2.580.000 

30.336.000 

630,000 

5  100.000 

25.279.000 

17,182.000 

188,000 

1.78% 
.85% 
.02% 
.03% 
.637o 
.15% 

3.95% 
12.20% 

6.89% 
.03% 
.76% 
.66% 
.04% 
.66% 
.38% 
.06% 
.13% 

1.60% 
.03% 
.27% 

1.33% 
.90% 
.01% 

$211 
276 
353 
183 
101 

80 
257 
178 
178 
175 
192 
141 
176 
164 

96 
153 
123 
107 
174 

150            ,, 
116             1 
190           1 
100 

'       Denmark                                 

'       Finland    .                  

Italy    

i      Netherlands                                                        

Norway                                                                   

11                     Total                                                            

1 

$    635.925.000 

33.36% 

9172 

P.  G. 

P.  G. 

G. 

P.  G. 

$        1,552,000 

2  932,000 

21,472.000 

2,466.000 

.08% 

.16% 

1.13% 

.«% 

$100 
165 

108            1 
94 

1 

$     28,422,000 

1.50% 

$110 

1 

AFRICA: 

1 

P.  G. 

1        °- 

$        2,254,000 
7.396.000 
1,631,000 

.12% 
.38% 

.m% 

$140 
303 
100 

«      11,281.000 

M% 

$198-H 

OCEANIA: 
Australl.1    

G. 
P.  G. 

P. 

G. 
P.  G. 
P.  Q. 

%      19,763.000 

1,328,000 

565,000 

7.000,000 

1,022,000 

140.000 

1.03% 
.07% 
.03% 
.37% 
.05% 
.01% 

$163 
104 
93            { 
163 
171 
100 

1 

f      29.818,000 

1.56% 

$157 

»1,906,041,000 

100.     % 

1              '^^  J 

P. — Private   Companies 
G. — Government 
P.  G. — Private    Companies   and    Government 


•Partly  estimated  to  Include  ALL  companies  and  lines 


5— Comparative  Table  of  Firsl-C  ass  Mai ,  Telegraph  and  Telephone  Trallic 

1 

(partly     ESTIMATED/ 

EUROPE  AND   UNITED  STATES 

(nearest     fiscal    period-year     1912) 

Countries 

Telephone 
Conversations^ 

Per  Cent,  of  Total 
Trafflc 

Total  Telephone 
Telearams*          Conversations                  Mall 
(See    Note)     '      and  Telegrams 

1                                       1 

Telephone 
Conversations 
and   Telegrams 

Mall 

1   Operated  1 

by 

Austria     G-                     364.578.000                23.Sfifi.000                      3fla.444.000                 1.642.006000 

191, 

81% 

G. 

138,028,000                9,460,000                   147,488,000                   384,641,000 

28% 

72% 

Bosnia     

G. 
G. 

1,500,000                1,000,000                       2,500,000                    25,665,000 
7,500,000                2,300,000                       9,800,000                     44,455.000 

9% 
18% 

91% 
82% 

Denmark    

P.  G. 

226,666,000               3,878,000                  230.544,000                  163,700,000 

58% 

42%     |, 

G. 

396,102,000              67,120,000                  463,222,000               1,723,958,000 
2,324,880,000              64,309,000               2.389.189,000               5,450,565,000 

21% 
30% 

79% 
70% 

German    Empire    

Great    Britain 

G. 

1,098,395,000             83.494,000               1.186.889,000              4.197.300,000 

22% 

78%  !; 

G.                     3,000,000               1,970,000                     4,970,000                   19,777,000 

20% 
26% 

80% 

Hungary   

G.                  203,357,000              13,979,000                  217,336,000                   605,974,000 

74% 

Italy     

P.  G.                230,000,000             25,315,000                 255,315,000                 755,480,000 
G.      1             4.920.000                2fio.ooo                   5.iaa.ooo                 71  R1R  rmn 

25% 
19^ 

75% 
81% 

Netherlands    i     P.  G.                 169.711,000               7.077.000                  176.788.000                 299.428.000 

37% 

63% 

Norway    

P.  G.                  170.000,000                4,000,000                   174,000,000                     95,831,000 
P.   G.                      7.000.000                5,000,000                     12,000,000                     57,899,000 

64% 
17% 

25% 

36% 
83% 
75% 

Roumania       

G.                     20.000.000                 4.300.000                      24.300.000                      74.511.000 

Russia   and    Finland P.O.                900,000,000             45,000,000                 945,000,000              1,464,257,000 

39% 

61% 

Servla    i.           G.      ,              5,927,000               2,385,000                     8,312,000                   28.681,000 

22% 

78% 

Spain      

1    P.  G. 
1    P.  G. 

35,000,000                6,600,000                     41,600,000                   143,054,000 
434.163.000                  4.996.000                    439.159.000                    199.764.000 

23% 
69% 
17% 

77% 

31% 
83% 

Sweden     

Switzerland     

1                                 "    •       ■                        ■        ■      "                     '"    

G.                    68.569.000                6.494.000                     75.063.000                  376.638.000 

1 

Total    Europe P.O. 

6,809,296,000      1    387,8O3,00Ot            7,197,099,000            17,775,402,000 

29% 

71% 

Per  1,000  population 

15,172                          864                           16,036                          39,607 

United   States 

P. 

15.600.000,000 

161,995 

112,660,000             15.712.660.000             10.212.237.000 

61% 

39% 

Per  1,000  population 

1,170 

163,165 

106.047 

Note:     Telegraph  Is  operated  by  Government,  except  In  the  United  States.  fAs  officially  reported 

P. — Priv.Tte   Companies 
G. — Government 
P,  G. — Private    Companies    and    Government 

•  Included    In    the    number    of    telegrams    for    each     European    country  are  government  and  service  messages,  also  International 
messages    (Incoming,    outgoing    and    transit). 

i  Includes    duplications    arising    from    the    European    practice    of  counting   each   International   message   In   each   country   handling 
the   message. 


6— Telephone  Development  of  each  City  In  Europe  with  over  500,000  Population 


January    I,    1913 


Amsterdam  

Barcelona     

Berlin    (Kxchangc    Arci) 

Birmingham    iKxchaiige    Area  J. 
Breslju    


Brussels    (Exchange 

Budapest    

Cologne 


Area). 


Copenhagen    (Exchange   Area). 
Dresden 


Glasgow     (Exchange    Area) 

Hamburg* Altona     (Exchange    Area). 
Kief 


Leeds    (Exchange    ArcaJ. 
Leipzig 


Liverpool  (Exchange  Area). 
London  (Exchange  Area)... 
Lyons 


Madrid     

Manchester    (Exchange    Area). 

Marseilles    

Milan     

Moscow     

Munich    

Naples 


Newcastle    (Exchange   Area). 

Odessa    

Paris    

Rome    

Sheffield    (Exchange  Area)... 

St.   Petersburg 

Vienna     

Warsaw    


Total  of  the  above  33  European  cities. 


Total  of  the  11  cities  in  U.  S.  with  over  5(X),0OO  population. 


Population 


581,000 

587,000 

2,320,000 

1,069,000 

537,000 

838,681 

880,000 

541,000 

608,000 

558,000 

1,150.000 

1,207,000 

506,000 

506.000 

617,000 

1,000.000 

7,280,000 

547,000 

600.000 

1,200.000 

565,000 

599,000 

1.533,400 

606,000 

723.000 

550,000 

505.600 

2,940.000 

539,000 

625.000 

1.686.000 

2,115,000 

872,478 


36,992,159 


15^64,000 


Number 

Stations 

of 

per  100 

Stations 

Population 

15,953 

2.7 

5,063 

.9 

144,543 

6.2 

18,055 

1.7 

18,533 

3.5 

21.470 

2.6 

24,567 

2.8 

23.158 

4.3 

50.802 

8.4 

23.728 

4.3 

41,500 

3.6 

71.222 

5.9 

4,635 

.9 

10,657 

2.1 

28,245 

4.6 

31,764 

3.2 

244,320 

3.4 

7,039 

1.3 

4.031 

.7 

29,453 

2.5 

7,735 

1.4 

10.900 

1.8 

43,348 

2.8 

33,168 

5.5 

3,600 

.5 

10.980 

2.0 

6.842 

1.3 

95.033 

3.2 

10400 

2.0 

10.605 

1.7 

47.649 

2.3 

56,747 

2.7 

28,935 

3.3 

1,184,680 


1,585,809 


NOTE:     Constantinople  excluded  from  above,  as  the  telephone  was  not  In  operation  Jan.  1,  1913. 

7— Telephone  Development-Urban  and  Rural 


3.2 


10.4 


EUROPE  AND   UNITED   STATES 
January  1,  1913 


Countries 


Austria    

Belgium  

Bosnia*    

Bulgaria*    

Denmark   (March   31.   1913) 

Finland    

France    

German    Empire    

Great    Britain    (.March   31.    1913). 

Greece    

Hungary    

Italy    (June   30.    1912)* 

Luxemburg    

Netherlands 

Norway*    

Portugal    

Roumania*   

Russia    

Servia   

Spain*    

Sweden    

Switzerland    

Other    places*     

Total    Europe    

Total  United   States 


a 
O 


Number  of  Stations 


P.  Q. 


In  cities  of 

over    100.000 

population 


83.404 
39,345 

1.000 

50,302 

9,472 

137.018 

683,948 

550.283 

854 

25,972 

46,211 

42.867 

18.903 

6.868 

4.700 

167,777 

12,475 
92.695 
28,350 


2,002,944 


3,027,379 


P. — Private   Companies 
G. — Government 
p.  G. — Private  Companies  and  Government 


Outside  of 

cities    of 
over  100,000 
population 


77,826 

19,295 

850 

2.200 

67,596 

25,728 

156,177 

618.724 

188,455 

2.243 

49,766 

42,955 

3,910 

34,328 

56,097 

1,172 

16,300 

114,704 

3.606 

21  525 

124.859 

62,223 

1,880 


1,692,419 


5,702,217 


Stations  per  100  Population 


In  cities  of 
over  100,000 
population 


2.6 
1.8 

1.0 
8.4 
6.3 
2.3 
4.6 
2.6 
.5 
2.6 
1.2 

3.0 
7.6 
1.1 
1.4 
2.0 

.6 

17.7 

6.0 


3.0 


11.4 


•Partly  estimated 


Outside   of 

cities    of 

over    100,000 

population 


.30 
.36 

.04 
.05 

3.10 
.84 
.47 

1.20 
.75 
.09 
.25 
.14 

1.48 
.74 

2.58 
.02 
.24 
.09 
.12 
.12 

2.46 

1.85 
.03 


.44 


8.17 


TELEPHONE  &  TELEGRAPH  STATISTICS  OF  THE  WORLD 


JANUARY  1,  1914 


1. 
2. 
3. 
4. 
5. 
6. 


SUPPLEMENT   No.   23A 

FOR 

BRIEF   OF    ARGUMENTS 

AGAINST 

PUBLIC   OWNERSHIP 


CONTENTS 

Development — Telephone 

Wire  Mileage — Telephone  and  Telegraph 

Gross  Eai-nings — Telephone  and  Telegraph 

Plant  Investment — Telephone 

Telephone  Development  of  Important  Cities 

Telephone  Development — Urban  and  Rural 


Note:      For  the   completeness   of  these   statistics  we  are   Indebted  to  the  courtesy  of  foreign  governments  and  private  companies, 
to  whom  many  thanks  are  due. 


b 


^l 


^\' 


'^■^^ 


BULLETIN    No.    4 

Issued  May,  1915 

(SuperscdinK  the  corresponding  statistics  for 
January  I,  191}  given  in  Bulletin  No.  2  issued 
April,    1914) 


AMERICAN  TELEPHONE  AND  TELEGRAPH  COMPANY 

OFFICE    OF   STATISTICIAN 

NEW   YORK   CITY 


1    Te 

leplione  Development  of  the  World, 

JANUARY    1,    1914 

by  Countries 

NORTH    AMERICA: 
United   States             

Number  of  Telephones 

Per  Cent. 

of  Total 

World 

Telephones 

per  100 
Population 

Population 

per 

Square  Mile 

Government 
Systetni 

Private 
Companies 

Total 

106,183 

4,326 

1,319 

20 

299 

300 

2,018 

9,542,017 

393,591 

3,548 

40,542 

2,318 

15,798 
4,068 
4,581 

9,542,017 

499,774 

7,874 

41,861 

2,338 

16,097 
4,388 
6,599 

64.09% 

3.36% 

.05% 

.28'rc 

.02'-c 

.11% 
.03% 
.04% 

9.7 
6.5 
0.1 
0.3 
0.7 

0.7 
0.4 
0.1 

33. 

2. 
27. 
20. 

0.4 

49. 
342. 
114. 

Other   No.    Am.    Places' 

West   Indies: 
Cuba                                    

Porto    Rico    

Other   W.    1.    Places* 

Total 

SOUTH    AMERICA: 

Argentine    

114,465 

10,006,483 

10,120,948 

67.98% 

7.5 

16. 

1,165 

48? 
129 

341 
1,413 

74,296 
2,500 

38,018 

19,709 

3,177 

2,445 

370 

4,000 

13,599 
4,688 

74,296 
2,500 

39,183 

19,709 

3,177 

2,926 

499 

4,000 

13,599 
5,029 
1,413 

.50% 
.02% 
.26% 
.13% 
.02% 
.02% 
.01% 
.03% 
.09% 
.03% 
.01% 

0.9 

0.1 
0.2 
0.6 
0.1 
0.2 
0.1 
0.1 
1.0 
0.2 
0.3 

8. 

4. 

7. 
12. 
12. 
13. 

4. 

7. 
18. 

7. 

2. 

Bolivia     

Brazil     

Chile   (Jvily  31,   1914) 

Peru*         

Other  Places  (incl.  Falkland  U.J 

Total 

EUROPE: 

Austria     

3,S29 

162,802 

166,331 

1.12% 

0.3 

8. 

172,344 

1.200 

65.000 

3,608 

1,586 

330,000 

1,420,100 

780,512 

3.200 

84.040 

61.978 

4,239 

76,267 

40,120 

1,203 

20,000 

157,710 

3,700 

2,722 

158,171 

96,624 

1,485 

127,691 

19,742 

10,223 

42,430 

7.647 

162.148 
40,000 

31,278 
74,837 

904 

172,344 

1,200 

65,000 

3,608 

129,277 

330.000 

1.420,100 

780,512 

3.200 

84.040 

91.720 

4,239 

86,490 

82,550 

8.850 

20.000 

319.858 

40.000 

3.700 

34.000 

233.008 

96.624 

2,389 

1.16% 

.01% 

.44% 

.02% 

.87% 

2.22% 

9.54% 

5.24% 

.02% 

.56% 

.62% 

.03% 

.58% 

.55% 

.06% 

.13% 

2.15% 

.27% 

.02% 

.23% 

1.56% 

.65% 

.02% 

0.6 
0.1 
0.9 
0.1 
4.5 
0.8 
2.1 
1.7 
0.1 
0.4 
0.3 
1.6 
1.4 
3.4 
0.2 
0.3 
0.2 
1.2 
0.1 
0.2 
4.1 
2.5 
0.1 

253. 
101. 
672. 
110. 
189. 
192. 
323. 
381. 
104. 
170. 
311. 
268. 
471. 

20. 
165. 
141. 

73. 

26. 
134. 
105. 

36. 
251. 

57. 

Belgium*    

Denmark   (.March  31,  1914) 

Great  Britain   (March  31,  1914). 
Greece*     

Hungary     

Italy    (  hine   30,    1913) 

Luxemburg    

Netherlands    

Portugal     

Roumania*    

Russia     (Eurupean) 

Finland*     

Servia*    

Spain*   

Sweden                   

Switzerland     

Other   Places   

Total 

3,4S5,809 

526,900 

4,012,709 

26.95% 

0.8 

121. 

ASIA: 

British    India   

6,504 

13.517 

219,551 

9,423 

22,110 

11,193 
13,492 

7,18? 
3,114 

17.697 
27.009 
219,551 
16,604 
25,224 

.12% 
.18% 
1.47% 
.11% 
.17% 

0.01 

0.01 

0.4 

0.1 

0.01 

227. 

167. 

356. 

3. 

29. 

China*   

Japan    (.M.nrch   31,   1914) 

Russia     ( .Asi.ilic) 

Other  Places*   

Total 

AFRICA: 

271,105 

34,980 

306,085 

2.05% 

0.04 

53. 

4,949 
28.889 
18,089 

12,310 
859 

17,259 
28,889 
18,948 

.12% 
.19% 
.13% 

0.1 
0.5 
0.02 

31. 
13. 
11. 

Union  of  South  Africa 

Other  Places*   

Total 

OCEANIA: 

51,927 

13,180 

65,096 

.44% 

aos 

18. 

137,485 
11,393 

49.415 
1,779 
1,371 

3,480 
7W 

4,979 
225 

137,485 

14,843 

7.284 

49.415 

6,758 

1,596 

.92% 
.10% 
.05% 
.33% 
.05% 
.01% 

2.S 

0.04 

3.5 

4.6 

0.1 

0.1 

8. 
61. 
32. 
10. 
75. 

8. 

Dutch    East    Indies* 

Hawaii    

New   Zealand    (March  31,   1914). 

Other  Places*   

Total    * 

201,443 

15,938 

217,381 

1.48% 

a4 

13. 

Total  World 

4,188,278 

10,760,278 

14,888,560 

^00M% 

0.9 

83. 

•Partly  estimated. 


2— Teleplicne  and  Telegraph  Wire  of  the  World,  by  Countries 

JANUARY    1,    1914 


Mile*  of  Telephone   Wire 


Miles  of  Telegraph  Wire  (See  Note) 


Serrlce 
lOpenled 


NORTH   AMERICA: 

United   States   ||         P. 

Canada    n  P,  G. 

Central  America   H  P.  G. 

Mexico   I  P.  G. 

Other  No.  Am.  Places* g  P.  G. 

West    Indies: 

Cuba   I  P.  G. 

Porto  Rico p.  Q. 

Other  W.  I.  Places* ^  P.  G. 


Total. 


SOUTH   AMERICA: 

Argentine    

Bolivia    

Brazil   

Chile  (July  31,  1914) 

Colombia   

Ecuador    

Paraguay    

Peru*    

Uruguay    

Venezuela  

Other  Places  (incl.  Falkland  Is.) 

Total 


EUROPE: 


P. 

P. 
P.  G. 

P. 

P. 
P.  G. 
P.  G. 

P. 

P. 
P.  G. 

G. 


1914). 


Austria    

Bosnia*    

Belgium*    

Bulgaria    

Denmark   (March  31 

France*   

German    Empire    .. 

Great  Britain   (.March  31,  1914) 

Greece*    

Hungary    

Italy   (.lv:ne  30,   1913) 

Luxemburg    

Netherlands    

Norway   

Portugal*    

Roumania* 

Russia    and    Finland 

Servia*    

Spain*    

Sweden    

Switzerland    

Other   Places*    


Total. 


ASIA: 


G. 

G. 

G. 

G. 
P.  G. 

G. 

G. 

G. 

G. 

G. 
P.  G. 

G. 
P.  G. 
P.  G. 
P.  G. 

G. 
P.  G. 

G. 
P.  G. 
P.  G. 

G. 
P.  G. 


British    India    P.  G. 

China    U  P.  G. 

G. 

P.  G. 

P.  G. 


Japan    (March    31, 
Russia    (.\sUtic). 
Other   Places*    . 


1?14). 


Total. 


AFRICA: 


Egypt 

Union  of  South  Africa. 
Other    Places'    


Total. 
OCEANIA: 


Number 
of  Miles 


Per  Cent. 

of  Total 

World 


2.137,479 

59.29% 

1,149.480 

3.08% 

13,614 

.04% 

98213 

.26% 

2,552 

.01% 

37,163 

6,332 

13,367 


23,458,200 


.10% 
.02% 
.03% 


62.83% 


Per  100 
Population 


22.6 
15.0 
0.2 
0.7 
0.8 


Number 
of  Miles 


Per  Cent, 
of  Total 
World 


1.7 
0.5 
0.3 


17.4 


239,478 

1,302 

110,360 

37,891 

5.094 

2,539 

430 

11.000 

26,468 

12.069 

2,957 


449,588 


.64% 

.30% 
.10% 
.01% 
.01% 

.03% 
.07% 
.03% 
.01% 


2.8 

0.05 

0.5 

1.1 

0.09 

0.2 

0.05 

0.2 

2.0 

0.4 

0.7 


1.20". 


0.8 


357.693 

1,500 

215,000 

8,320 

342.301 

1 .200.000 

4,548,339 

2.581,895 

5.700 

281.299 

195,000 

4.590 

225,025 

181.567* 

27.500 

70,000 

716,000* 

7,100 

68.000 

510.573 

249,343 

3,495 


.96% 

.58% 
.02% 
.92% 

3.21% 
12.18% 

6.91% 
.02% 
.75% 
.52% 
.01% 
.60% 
.49% 
.07% 
.19% 

1.92% 
.02% 
.18% 

1.37% 
.67% 
.01% 


11,800,240 


31.60% 


81,300 
95.000* 
490,821 
28,277* 
63,928 


.22% 
.25% 
1.31% 
.08% 
.17% 


P.  G. 

G. 

P.  G. 


Australia  G. 

Dutch  East  Indies P.  G. 

Hawaii   I  P. 

New  Zealand   (March  31,  1914)*l  G. 

Philippine  Islands H  P.  G. 

Other    Places*    ||  P.  G. 


Total 

ToUi  World. 


759,326 


2.03% 


68,484 
85,707 
34,189 


188,380 


.19% 
.23% 
.09% 


.51% 


1.2 
0.08 
2.8 
0.2 
12.0 
3.0 
6.7 
5.6 
0.1 
1.3 
0.6 
1.7 
3.6 
7.4 
0.5 
0.9 
0.5 
0.2 
0.3 
9.1 
6.4 
0.09 


2.5 


0.03 

0.03 

0.9 

0.1 

0.04 


0.09 


0.6 
1.4 
0.03 


0.1 


435,725 
57,596* 
19,724 
97,904 
17,708 
3,517 


682,174 


1.30% 
.15% 
.06% 
.26% 
.05% 
.01% 


1.83% 


37,337,908 


100.00% 


10.0 
0.2 
9.6 
9.1 
0.2 
0.1 


1,2 


2J 


1,849,196 

193,277t 

15.713 

49,169 

6,048 


I      Per  100 
I   Population 


12,660  , 

664t 
2,551  ' 


2,129,278 


142,153 

5,979 

38,304 

23  000* 

11,860 

5.384 

4,367 

9,315 

5,597 

5,291 

740 


33.33% 

3.48% 
.287,, 
.89% 
.11%. 

.23% 
.01% 
.05% 

38.38% 


2.56% 
.11% 
.69% 
.41% 
.21% 
.10% 

.oe«-<, 

.17-0 
.10% 
.10% 
.01% 


251,990 


4.54% 


150.840 

7,000 

28,000 

11,171 

8,191 

381,000 

459,811 

313,166 

11.000 

99.802 

129.500 

1,355 

24.868 

13.211 

14.500 

16,000 

500,491 » 

5.250 

56,500 

42.194 

16.476 

2,295t 


2,292,621 


282,424 

52,146 

106,946 

O 

102, 193* 


543,709 


2.72% 

.13% 

.50%, 

.20% 

.15% 

6.87% 

8.29% 

5.64%. 

.207., 

1.807., 

2.337o 

.02% 

.45  7o 

.24%. 

.2670 

.29%, 

9.027o 

.09% 

1.027o 

.76% 

.30% 

.04% 


41.32% 


5.09% 

.94% 

1.93% 

O 

1.84% 


12.622 

54,201 

109,537 


176,360 


9.80% 


.23% 

.98% 

1.97% 


3.18% 


108,931 

12,929 

0 

25,892 

4,600 

1,790 


1.97% 
.23% 

0.00% 
.477o 
.08% 
.03% 


164,142 


2.78% 


5,548,100 


100.00% 


1.9 
2.5 
0.3 
0.3 
1.8 

0.6 

0.08 

0.05 


1.6 


1.6 
0.2 
0.2 
0.7 
0.2 
0.4 
0.5 
0.2 
0.4 
0.2 
0.2 


0.5 


0.5 
0.4 
0.4 
0.2 
0.3 
1.0 
0.7 
0.7 
0.3 
0.5 
0.4 
0.5 
0.4 
0.5 
0.3 
0.2 
0.3 
0.1 
0.3 
0.7 
0.4 
0.1 


0.6 


0.1 

0.02 

0.2 

O 

0.06 


ao7 


0.1 
0.9 
0.09 


0.1 


2.2 

0.03 

0.0 

2.4 

0.05 

0.07 


0.3 


0.3 


Note:  Telegraph  service  Is  operated  by  Governments,  except  In  the  United  States. 

P. — Private  Companies. 
G. — Government. 
P.  G. — Private  Companies  and   Government.     See  Table   1   for  statistics  as  to  proportion  of  telephones  operated  by  Government. 

'Asiatic    Russia    Included    in    European  Russia.  *Partiy  estimated. 

^European  Turkey  Included  In  Asiatic  Turkey.  tjune  30,  1914. 


3— Telephone  and  Telegraph  Gross  Earnings  of  the  World,  by  Countries 


FISCAL    YEAR    1913 
(Estimated  where  necessary) 


Gross  Earnings 


Telephone 


Telegraph 
(Sec-  Note) 


Serrlee 

Operated 

by 


NORTH   AMERICA: 

United  States  

Canada*    '   P, 

Central  America   'p 

Mexico  '  P. 

Other  No.  Am.  Places I  P 

West  Indies: 

Cuba  

Porto  Rico  '  P, 

Other  W.   I.  Places i  P. 


P. 
G. 
G. 
G. 
G. 

G. 
G. 
G. 


Total 


Per  Cent,  of  Total 


Telephone        Telegraph 


Total. 


SOUTH   AMERICA: 

Argentine    

Bolivia    

Brazil  

Chile   

Colombia   

Ecuador  

Paraguay    

Peru    

Uruguay    

Venezuela   

Other  Places  (incl.  Falkland  Is.) 


Total 


EUROPE: 

Austria     

Bosnia    

Belgium 

Bulgaria    

Denmark 

France   

German  Empire 

Great  Britain   

Greece    

Hungary    

Italy    

Luxemburg    

Netherlands 

Norway    

Portugal    

Roumania   

Russia  and  Finland^. 

Servia    

Spain    

Sweden     

Switzerland     

Other  Places   


Total. 


ASIA: 

British    India    . 

China    

Japan    

Other    Places!. 


Total. 


AFRICA: 


Egypt  

Union  of  South  Africa. 
Other   Places    


Total. 


P. 

P. 
P.  G. 

P. 

P. 
P.  G. 
P.  G. 

P. 

P. 
P.  G. 

G. 


G. 

G. 

G. 

G. 
P.  G. 

G. 

G. 

G. 

G. 

G. 
P.  G. 

G. 


P.  Q. 
P.  G. 
P.  G. 

G. 
P.  Q. 

G. 
P.  G. 
P.  G. 

G. 
P.  Q. 


P.  G. 

P.  G. 

Q. 

P.  G. 


$305,400,000 

16,400,000 

300.000 

1,198.000 

66,700 

957.000 
219,100 
168,400 


$324,709,200 


$51,300,000 

5,568,000 

1,825,000 

1,208.000 

121,200 

419,000 
49,100 
84,600 

$60,574,900 


$356,700,000 

21,968,000 

2,125.000 

2,406,000 

187,900 

1,376,000 
268,200 
253,000 


$385,284,100 


85.6'-<. 
74.7<'o 
14.1 '-C 
49.8'~c 
35.5% 

69.5% 
81.7% 
66.6% 


14.4% 
25.3% 
85.9% 
50.2% 
64.5% 

30.5% 
18.3% 
33.4% 


84.3% 


3,756,000 

66,000 

1,500,000 

823,000 

90,000 

66.000 

22,000 

168,000 

540.000 

211,000 

21,500 


$  7,263,500 


$  5,473,000 
142,000 
4,045,000 
482.000 
464,000 
106.000 

57,000 
138,000 
154,000 
198,000 

11,000 


$  5,766,700 

41,600 

3,115,700 

107,400 

2,968.300 

12,713,200 

46,249,900 

30,462,900 

60,900 

3,315,400 

3,867,800 

86,300 

2,896.200 

1,584.600 

317,500 

456,500 

10,248,800 

111,400 

1,475,000 

5,203.000 

2,760,000 

62,400 

$133,871,500 


$11,270,000 


$  3,835,800 

222,000 

1,280,000 

524,100 

538,400 

9,500,000 

9,725,100 

15,165,900 

420,000 

2,100,000 

2,842,900 

22,000 

1,005.400 

815,200 

725,000 

800,000 

17,983,200 

170,000 

1,850,000 

770  700 

886,500 

29,300 


9,229,000 

208.000 

5,545.000 

1,305,000 

554,000 

172,000 

79,000 

306.000 

694,000 

409.000 

32,500 


40.7% 
31.7% 
27.1% 
63.1% 
16.2% 
38.4% 
27.8% 
54.9  7i, 
77.8'i 
51.6% 
66.2% 


15.7% 


59.3% 
68.370 
72.9% 
36.9% 
83.8% 
61.6% 
72.2% 
45.1% 
22.2% 
48.4% 
33.8% 


$71,211,500 


$  18,533,500 


»  9,602,500 

263.600 

4,395,700 

631,500 

3,506,700 

22,213.200 

55,975.000 

45,628,800 

480,900 

5.415,400 

6,710,700 

108  300 

3.901,600 

2,399.800 

1,042.600 

1.256,500 

28,232,000 

281.400 

3.325.000 

5.973.700 

3.646.500 

91,700 

$205,083,000 


39.2% 


60.8% 


60.1% 

15.8'; 

70.9% 

17.0'; 
84.6': 

57.2  ^ 
82.6  ; 

66.8-; 
12.7^:. 

61.2'c 
57.6% 
79.7% 
74.2'^- 
66.0': 
30.5'n 
36.3'; 
36  3'» 
39.6;, 
44.4% 
87.1% 
75.7% 
68.0% 


65.3% 


39.9% 
84.2% 
29.1% 
83.0% 
15.4% 
42.8% 
17.4% 
33.2% 
87.3% 
38.8% 
42.4% 
20.3% 
25,8% 
34.0% 
69.5% 
63.7% 
63.7% 
60.4% 
55.6% 
12.9% 
24.3% 
32.0% 


34.7% 


772.400 

792,000 

7,273,900 

1,776,000 


$  10,614,300 


$  3,698.900 
5,274,300 
6,276,200 
1,867,200 


•16,116,600 


4,471,300 

6,066.300 

12,550,100 

3,643,200 


$  26,730,900 


17.3% 
13.1% 
58.0% 
48.7% 


39.7% 


82.7% 
86.9% 
42.0% 
61.3% 


60.3% 


Telephone 
Earnings 

per 
Telephone 


$33.00 
35.30 
40.20 
29.50 
29.90 

68.10 
58.00 
28.20 

$33.10 


$54.40 
26.40 
47.50 
39.50 
36.20 
23.50 
44,50 
42.00 
46.80 
43.60 
15.50 


$47.90 


$36.30 
37.60 
50.40 
31.30 
24.00 
40.80 
34.00 
40.10 
29.00 
41.50 
43.80 
21.20 
35.00 
21.60 
43.80 
23.20 
30.70 
30.50 
50.00 
23.40 
29.50 
27.80 


$35.00 


$48.60 
33.00 
35.40 
48.00 

$37.60 


OCEANI 

Australia     

Dutch  East  Indies. 

Hawaii    

New   Zealand 
Philippine    Islands 
Other  Places 


Note;    Telegraph  service  Is  operated  by  Governments,  except  In  the  United  States. 

P. — Private  Companies. 

G. — Government. 
P-  G.— Private  Companies  and   Governm»nt.     See  Table  1  for  statistics  as  to  proportion  of  telephones  operated  by  Gover 
•Telegraph    earnings   are   for   year  ended    June   30,    1914.      Earnings   of    Pacific    Cable   Board   excluded. 
♦  Earnings  from  exchange  service  only.     Toll   and   long   distance  earnings   not   reported. 
^Telegraph  earnings  of  Asiatic   Russia  Included   In  telegraph  earnings  of  European  Russia. 


4— Telephone  Plant  Investment  of  the  World,  by  Countries 


JANUARY    1,    1914 

(Estimated  nhere  necessary) 


NORTH    AMERICA: 


United    States   

Canada   

Central   America    

Mexico    

Other  North  America  Places. 
West    Indies: 

Cuba    

Porto    Rico   

Other  West  Indies  Places  . 


Total 


SOUTH   AMERICA: 


Argentine     

Bolivia    , 

Brazil    

Chile     

Colombia    

Ecuador    

Paraguay     

Peru     

Uruguay   

Venezuela    

Other   Places   (iccl.    Falkland   Is.). 


Total 


EUROPE: 


Austria    

Bosnia     

Belgium    

Bulgaria   

Denmark    

France    

German  Empire 
Great    Britain    .  . 

Greece    

Hungary    

Italy    

Luxemburg  .... 
Netherlands    .. .  . 

Norway    

Portugal     

Roumania    

Russia     

Finland 

Servia    

Spain     

Sweden     

Switzerland  .... 
Other  Places  .. . 


Total 


ASIA: 


British    India 

China    

Japan     

Other    Places 


Total 


AFRICA: 


Egypt    

Union  of  South  Africa. 
Other  Places   


Total 


OCEANIA: 


Australia    

Dutch    East   Indies. 

Hawaii    

New   Zealand   

Philippine    Islands 
Other  Places   


t  Total    .  .  . 

ToUl  World 


Serrlee 
Opented 


P. 
P.  G. 
P.  G. 
P.  G. 
P.  G. 

P.  G. 
P.  G. 
P.  G. 


P. 

P. 
P.  G. 

P. 

P. 
P.  G. 
P.  G. 

P. 

P. 
P.  G. 

G. 


G. 

G. 

G. 

G. 
P.  G. 

G. 

G. 

G. 

G. 

G. 
P.  G. 

G. 
P.  G. 
P.  G. 
P.  G. 

G. 
P.  G. 

P. 

G. 
P.  G. 
P.  G. 

G. 
P.  G. 


P.  G. 

P.  Q. 

G. 

P.  O. 


P.  Q. 

G. 

P.  G. 


G. 
P.  O. 

P. 

G. 
P.  G. 
P.  Q. 


Plant  Investment 


$1,149,900,000 

74.466.000 

913.000 

5,264.000 

398,000 

3,858,000 
621,000 
844,000 


91.236,264,000 


15.800,000 

375,000 

11,013,800 

2,153,000 

336.600 

377.000 

70,800 

531,600 

1,608,000 

1,092,800 

158,400 


$      33,517,000 


39,382,000 

420,000 

14,495,000 

658,000 

17,060,000 

81,840,000 

278.340,000 

143,655,000 

560,000 

16.388.000 

12,092,000 

694,000 

12,992,000 

10,768.000 

1,502.000 

3.500,000 

45,583,000 

4.279.000 

925,000 

5,100,000 

25,595.000 

18,524,000 

372,000 


$    734,724,000 


2,655,000 

4,456,000 

23,597,000 

5.856,000 


$      36,564,000 


1,948.000 
8,745.000 
2.653,000 


$      13,346,000 


24,458.000 
2.387,000 

980,000 
6,047,000* 
1,040,000 

207,000 


•      35,119,000 


92,089,534.000 


Per  Cent. 

of  Total 

World 


55.03% 

3.56% 

.04% 

.25% 

.02% 

.19% 
.03% 
.04% 


69.16% 


.76% 
.02% 
.53% 
.10% 
.01% 
.02% 

.02% 
.08% 
.05% 
.01% 


1.60  <■ 


1.88% 
.02% 
.69% 
.03% 
.82% 

3.92% 
13.32% 

6.87% 
.03% 
.78% 
.58% 
.03% 
.62% 
.52% 
.07% 
.17% 

2.18% 
.21% 
.04% 
.24% 

1.23% 
.89% 
.02% 


35.16% 


.13% 

.21% 

1.13% 

.28% 


1.75% 


.09% 

.42% 
.13% 


.64% 


1.17% 
.12% 
.05% 
.29% 
.05% 
.01% 


1.69% 


100.00% 


Investment 

per 
Telephona 


$121 
149 
116 
126 
170 

240 
142 
128 


9122 


$213 
150 

281 
109 
106 
129 

142 
133 
118 
217 

112 


$201 


$234 
350 
223 

182 
132 
248 
196 
184 
175 
195 
132 
164 
150 
140 
170 
175 
143 
107 
250 
150 
110 
192 
156 


9186 


$150 
165 
107 
140 


$119 


9113 
303 
140 


9205 


$189 
161 
135 
122* 
154 
130 


9162 


9140 


P. — Private   Companies. 

G. — Government. 
P.   G. — Private  Companies  and  Government. 
•Investment   in  exchange   plant  only. 


See  Table  1  for  statistics  as  to  proportion  of  telephones  operated  by  Government. 


EUROPE, 

5— Telephone  Development  of  Important  Cities 

AUSTRALIA,   NEW  ZEALAND,  JAPAN  AND  THE   UNITED  STATES 
JANUARY    1,    1914 

Co 

untry  and  City   (or  Exchange  Area) 

Population 

Estimated 

{Ciljr  or  Exchange 

Area) 

Number  of 
Telephones 

Telephones      'i 
perlOO          1 
Population 

AUSTRALIA: 

AUSTRIA: 

BELGIUM*: 

BULGARIA: 

DENMARK: 
FRANCE*: 

GERMAN    EMPIRE: 

GREAT  BRITAINt: 

4 

GREECE*: 
HUNGARY: 

ITALY*: 

JAPAN: 

NETHERLANDS: 

NEW  ZEALANDt: 

NORWAY*: 
PORTUGAL: 
ROUMANIA*: 
RUSSIA: 

SPAIN*: 
SWEDEN: 
SWITZERLAND: 
UNITED  STATES: 

Adelaide    

201,000 

n.Tsn 

4.3 
4.2 
4.2 
4.8 

2.3 
2.3 
2.2 
3.2 
1.6 
2.6 
1.0 
1.5 

1.5 
8.9 
1.9 
1.7 
1.3 
1.4 
3.2 

6.6 
3.8 
3.4 
4.8 
4.6 
4.7 
3.5 
6.5 
5.9 
5.0 
5.0 
3.5 
5.5 
4.2 
6.8 
1.8 
1.7 
1.4 
1.2 
2.6 
2.1 
2.1 
3.0 
3.4 
1.8 
2.9 
3.5 
2.5 
1,8 
1.8 
1.6 
0.5 
3.2 
1.3 
2.1 
0.7 
0.5 
2.2 
1.5 
1.3 
2.1 
1.3 
I              1.6 
1.8 
1.1 
2.9 
4.2 
3.0 
6.2 
5.7 

8.4 
1,2 

1.5              1 

1.0 
1.1 
3.1 
1.2 
2.7 
3.7 
0.8 
0.7 

7.7 
24.1* 

5.5 
6.7 

11.3 
12.0 

Brisbane    ' 

160.000                           6,671 
651.000                         27,490 
725,400                         34,566 
210.737                           4,749 
458.195                         10,310 
239.692                           5,324 
2,092,382                         64,438 
486,829                           8,020 
838,681                           21,470 
291,6^6                           2,938 
339,937                           5,060 
103,000                           1,599 
621,000                         55,080 

266.000                           5,090 
223.000                           3.826 
547.000                           7.039 
565.000                           7.735 
2,940,000                         95,033 

2,363,000                       154,800 
545.000                           20,573 
315,000                         10,820 
552,000                           26,422 
562,000                           25,721 
411,000                         19,133 
322,000                         11,342 
445,000                         28,932 
1,310,000                         77,322 
323,000                          16,194 
622,000                         31,176 
294,000                         10,201 
629,000                         34,323 
367,000                         15,354 
306,000                         20,929 
475,000                           8,580 
1,145.000                           19.780 
340.000                           4.615 
335.000                           4.171 
475.000                           12.243 
440,000                             9,056 
455.000                             9.692 
515.000                         15,258 
1,190.000                         40.849 
590.000                          10.864 
1,160.000                           34.053 
7,300.000                       258.895 
1,255,000                         31,443 
650.000                         11,561 
470,000                             8.574 
715,000                         11,354 
167,000                              854 
880,000                         27,944 
118,000                            1,500 
599,000                         12,709 
723,000                             4,774 
342,000                             1,586 
539,000                         11.719 
428,000                           6,217 
440.766                           5.892 
508.068                           10,447 
447.951                            5,696 
1,387.366                         21,787 
2,445.048                         43.681 
424,369                           4,825 
595,000                         17,212 
302,000                         12,823 
459,000                         13,630 
109,300                           6,722 
86,140                             4,927 

247,488                         20,699 
435,000                           5,394 
338.000                           4,983 
506,060                           5,143 
415,604                           4,503 

1,617,157                           49.848 
620,155                           7.712 

2,018.596                         54.815 
872.478                         31.952 

597.000                             4,547 
600,000                           4,365 

178,030                         13.672 
354,783                         85,641* 

140.000                           7.669 
201,000                         13.S65 

Sydney     I 

Lemberg    I 

Prague     > 

Triest     ' 

Vienna     ' 

Liege    

Sofia     

Lille     

Berlin   

Frankfort   

Hannover    

Stuttaart    

Belfast   

Bristol      

Dublin    

Edinburgh    

Glasgow     

Leeds     

London     

Nottingham     

Sheffield    

Budapest    

Milan    

Naples    

Palermo    

Rome    , .    . 

Turin    

Kobe     

Kyoto     

Nagoya    

Toklo    

Yokohama    

Amsterdam    

Rotterdam    

Auckland    

Chrlstlanla     

Lisbon    

Bucarest   

K  lef    

Lodz    

Moscow    

Petrograd    

Barcelona   

Madrid     

Goteborg  (Gothenburg)   

Basel    

Zurich    

Total  of  the  12  cities  with  over  500.000  population 

Total  of  the  33  cities  with  over  200,000  population 

16.330.000 
23,000,900 

1,849.518 
2,749,785 

•Statistics  as  of  January  1,  1913. 
tStatistlcs  as  of  March  31,   1914. 


^Statistics  as  of  June  30.  1913. 

*70',''t    of  this  development  Is  secured  by  a   private  company. 


6— Telephone  Development— Urban  and  Rural 

EUROPE,  AUSTRALIA,    NEW  ZEALAND,  JAPAN.  AND  THE   UNITED  STATES 

JANUARY    1,    1914 


Countrlei 


Serrlos 

Opeimted 

by 


Number  of  Telephones 


Telephones   per    100   Population 


In  cities  of 
over  100,000 
population 


Outside  of 

cities  of 
over  100.000 
population 


In  cities  of 

over  100,000 

population 


Outside  of 

cities  of 

over  100,000 

population 


Austria    

Bosnia*    

Belgium*     

Bulgaria    

Denmark   (March  }\.  191-1) 

France*  

German    Empire    

Great  Britain  (March  31,  1914) 

Greece*   

Hungary   

lUly   (June  30,   1913) 

Luxemburg    

Netherlands    

Norway*  

Portugal   

Roumania*    

Russia    

Finland*    

Servia*    

Spain*   

Sweden    

Switzerland    

Other  Places  

Total    Europe    

Australia    

New  Zealand    (March  31,   1914) 

Japan  (March  31.  1914) 

United  States 


G. 

G. 

G. 

G. 
P.  G. 

G. 

G. 

G. 

G. 

G. 
P.  G. 

G. 
P.  G. 
P.  G. 
P.  G. 

G. 
P.  G. 

P. 

G. 
P.  G. 
P.  G. 

G. 
P.  G. 


95,053 

43,600 

1,599 

55.080 

154.000 

743,246 

579,686 

900 

29,444 

53,937 

46,777 

20,699 

7.647 

5.200 

200,029 

9,957 

12,850 

99,313 

30,177 

0 

2,189,194 

83,807 

6,722 

99,645 

3,339,806 


77,291 

1,200 

21,400 

2,009 

74,197 

176,000 

676,854 

200,826 

2,300 

54,596 

37,783 

4,239 

39,713 

61,851 

1,203 

14,800 

119,829 

30,043 

3,700 

21,150 

133,695 

66,447 

2.389 

1,823,515 

53,678 

42,693 

119,906 

8^2,211 


2.8 

2.0 
1.5 
8.9 
2.6 
4.9 
2.6 
0.3 
3.0 
1.3 

3.2 
8.4 
1.2 
1.5 
2.1 
6.5 

0.6 

18.6 

6,3 

0.0 

3.0 

4.5 

6.2 

1.5 

11.B 


0.30 
0.06 
0.39 
0.04 
3.33 
0.52 
1.29 
0.83 
0.06 
0.27 
0.12 
1.59 
0.84 
2.82 
0.02 
0.20 
0.08 
0.96 
0.08 
0.12 
2.62 
1.96 
0.09 

0.45 


4.40 


8.88 


♦Partly   estimated. 

P. — Private  Companies. 
G. — Government. 
P.  G. — Private  Companies  and  Government.     See  Table  1  for  statistics  as  to  proportion  of  telephones  operated  by  Government. 


Why   Governments   Fail 

in 
Commercial   Enterprises: 


The  FiscaJ  Beirrier   Between 

Plan  and  Execution         ^^^^,r,m^ 


,      AUG  a      1915 
''^^Jir  Of 


B  y 
A.    LINCOLN    LAVINE 


^  ,  .   ^r- 


ctTBLi 


I- 


American  Telephone    and  Telegraph  Company 

Commercial    Engineer'*    Office 
New  York 


Why   Governments   Fail   in    Commercial 
Enterprises : 

The    Fiscal    Barrier    Between    Plan 
and    Elxecution 


By    A.    LINCOLN    LAVINE 


Some  time  ago,  a  printing  plant  in  Cincinnati,  Ohio,  belonging  to 
one  of  the  largest  business  organizations  in  the  world,  shut  down  for 
lack  of  funds.  The  manager  temporarily  relinquished  his  duties,  the 
clerks  lounged  around,  the  printing  hands  hovered  idly  about  the 
presses  or  didn't  come  to  work  at  all.  The  salary  of  all  the  "workers" 
continued,  but  no  work  was  turned  out,  because  there  was  no  money 
on  hand  to  run  the  establishment.  Yet  the  annual  business  of  this  con- 
cern amounts  to  $250,000,000. 

In  another  branch  of  this  same  concern,  in  New  York  City,  two 
time  recording  clocks  lay  unused  for  three  months.  During  all  that 
time  there  was  no  money  to  be  had  for  their  repair.  Ten  dollars 
would  probably  have  repaired  the  clocks.  The  concern  owning  them 
was  gathering  in  a  daily  revenue  of  more  than  two-thirds  of  a  million 
dollars.  But  the  clocks  remained  useless.  There  was  not  even  ten 
cents  on  hand  available  for  their  repair. 

The  name  of  the  concern  in  question  is  the  United  States  Post 
Office  Department.  The  instances  cited  above  are  but  photographs 
in  miniature,  taken,  for  convenience,  to  illustrate  what  is  going  on 
year  in  and  year  out  on  a  vastly  larger  scale,  not  only  in  the  Post 
Office  Department,  but  in  every  other  department  of  government.  The 
worst  of  it  is,  it  is  not  easy  to  point  out,  in  this  situation,  the  political 
sins  of  omission  or  commission  which  go  to  make  up  the  legitimate 
prey  of  the  muckraker.  The  suspended  print  shop  and  neglected  time- 
recording  clocks  are  less  symptoms  of  a  curable  disorder,  than  normal 
characteristics  of  a  peculiar  system.  They  are  simply  the  result  of  a 
natural  law,  which  permeates  every  branch  of  governmental  endeavor, 
and  which,  like  Banquo's  ghost,  "will  not  down." 

3 


This  law  is  the  offspring  of  two  forces,  a  fiscal  theory,  and  a 
political  practice :  both  apparently  necessary  to  run  a  government,  both 
ever  present  in  all  governments,  and  both  fatal  in  leaving  a  vulnerable 
spot  in  the  government's  make-up,  an  Achilles'  heel,  which  seems  to 
place  a  definite  limitation  upon  what  a  government  can  do,  and  do  well. 

The  fiscal  theory  is,  that  not  a  stitch  of  governmental  work  can 
be  done — not  a  dollar  spent — without  some  definite  appropriation  there- 
for; so  that  if,  (as  was  actually  the  case  a  few  years  ago),  the  travel- 
ing allowances  of  the  officials  of  the  railway  mail  service,  whose  duties 
consist  in  personal  inspection  of  the  efficiency  and  needs  of  the  service, 
happen  to  reach  the  limit  set  by  the  appropriations,  the  men  are  com- 
pelled to  quit  work  absolutely,  although  this  in  no  way  hinders  them 
from  later  collecting  salaries  for  the  work  they  didn't  do. 

The  political  practice  is,  that — no  matter  how  much  time  and  toil 
and  money  may  have  been  expended  instnicting  Congress  as  to  the 
wants  of  the  departments — when  the  time  comes  to  respond,  the  vot- 
ing of  appropriations  is  governed  not  by  the  actual  needs  of  the  ser- 
vice, but  by  the  political  needs  of  the  moment.  Secretaries  of  the 
Treasury,  professors  of  political  economy  and  other  fiscal  experts 
have  heaped  up  a  veritable  mound  of  literature,  calling  attention  to 
the  situation,  and  urging  some  kind  of  reform;  but  unfortunately  the 
fact  remains,  that  those  who  hold  the  government  purse-strings  are 
not,  and  cannot  be,  in  a  position  to  do  intelligent  spending. 

To  illustrate,  let  us  see  how  Uncle  Sam  lays  out  his  dollars  in  tak- 
ing care  of  his  various  enterprises. 

Congress,  upon  assembling  each  year  in  December,  receives  a 
"Letter  from  the  Secretary  of  the  Treasury."  This  "letter"  is  a 
document  of  no  mean  bulk,  full  of  statistics  purporting  to  show  how 
much  money  the  government  will  have  to  spend  during  the  coming 
year  to  run  its  business.  The  document  is  technically  referred  to  as 
the  Annual  Estimates.  Now,  no  Congressman  imagines  for  a  minute 
that  these  Estimates  represent  the  Secretary  of  the  Treasury's  mature 
and  deliberate  judgment  of  what  it  should  cost  to  run  the  government 
for  the  coming  year.  Every  Congressman  knows  just  how  the  formid- 
able array  of  statistics  presented  to  Congress  was  got  up.  He  knows 
that  the  imposing  tables  of  figures  were  prepared  by  the  various  depart- 
ments at  the  beginning  of  their  various  tasks  shortly  after  July  1st; 
that  the  bureaus  proceeded  solely  upon  the  basis  of  the  current  year 
to  guess  at  their  probable  needs  for  a  financial  year  which  was  not 
to  begin  for  twelve  months  to  come,  and  not  to  end  until  almost  two 
calendar  years  had  elapsed  after  the  time  when  the  work  on  the 
estimates  began.  He  knows,  what  is  more,  that  the  Secretary  of  the 
Treasury  has  practically  no  say  whatever  in  getting  up  the  estimates, — 
that,  for  instance,  if  the  War  Department  should  multiply  or  divide  by 
ten  its  previous  estimate  for  river  and  harbor  expenditure,  the  Secre- 
tary must  remain  silent,  and  embody  the  estimate  in  his  "letter." 


It  is  not  surprising,  therefore,  that  when  the  Estimates  are  passed 
on  to  the  House  appropriation  committees,  they  are  treated  as  a  mere 
collection  of  guesses,  not  to  be  taken  seriously,  and  to  be  used  as  a 
guide — the  roughest  of  guides — only  when  political  considerations  are 
absent.  But  political  considerations  are  rarely  absent.  Only  too  often, 
when  the  needs  of  a  service  have  become  exceedingly  pressing,  special 
estimates  are  compiled  after  long  and  scientific  study,  after  laborious 
and  expensive  research,  to  be  lightly  tossed  aside  by  the  appropriation 
committee,  because  political  expediency  at  the  time  happens  to  run 
counter  to  the  needs  of  the  service.  But  this  is  not  all.  When  the 
nominal  needs  of  the  senice  have  adventured  through  the  committees 
and  are  presented  to  the  House,  they  are  subjected  to  the  fire  of  new 
influences,  new  opinions,  new  and  extended  possibilities  of  political 
pressure.  And  when,  in  their  modified,  battered  or  distorted  form, 
they  have  passed  through  the  House,  they  must  run  the  gauntlet  of 
the  Senate.    Then  the  E.xecutive  approves  or  disapproves. 

The  results,  of  course,  are  natural.  Illustrations  are  constantly 
recurring.  Not  long  ago,  a  great  transatlantic  steamer  struck  bottom 
in  New  York  harbor.  Most  people  called  it  an  "accident."  It  was  not 
an  accident.  It  was  a  direct  result.  The  money  which  should  rightly 
have  gone  to  the  improvement  of  that  harbor  had  been  diverted,  in 
the  name  of  political  expediency,  to  the  scooping  out  of  some  useless 
bayou,  which  never  will  be  a  harbor,  and  which,  if  it  could  be  made 
one,  would  never  be  used.  Had  this  been  up  to  a  private  company,  a 
great  hue  and  en,'  would  have  been  raised,  and  rightly  so.  The  private 
company  would  have  been  held  strictly  accountable.  But  the  govern- 
ment was  able  to  ignore  an  important  public  need  with  perfect  im- 
punity, and  escape  any  accountability  for  the  direct  result  of  a  dis- 
criminatory diversion  of  funds. 

This  is  only  one  of  countless  examples.  Under  our  system  of 
government,  a  small  majority  of  either  house,  or  the  Executive,  may, 
by  cutting  off  financial  support,  starve  or  temporarily  paralyze  any 
important  public  need.  Take  so  vital  a  branch  of  government  activity 
as  the  federal  civil  service  commission.  Not  only  its  vigorous  adminis- 
tration, but  its  very  existence,  is  being  threatened  annually,  not  by 
the  repeal  of  the  law  under  which  it  exists, — for  that  would  not  be 
tolerated  by  the  sentiment  of  the  country, — but  by  a  small  crowd  in 
one  house  temp)orarily  securing  sufficient  power  to  jeopardize  its  fiscal 
support.  It  takes  constant  lobbying  on  the  part  of  its  friends  to  keep 
it  from  this  form  of  submersion.  This  is  even  true  of  state  legisla- 
tures. In  the  state  of  Colorado,  a  few  years  ago,  the  civil  service  work 
was  absolutely  abolished  by  a  failure  of  the  legislature  to  provide  the 
necessary  appropriation. 

All  this  does  not  mean,  necessarily,  that  the  machinery  of  Ameri- 
can government  must  be  remodeled.  It  is  simply  an  indication  of  what 
a  government  may  undertake  with  profit, — what  it  may  or  must  do 
itself,  and  what  it  might  better  leave  to  others.     For  when  we  pass 

5 


from  the  simple  and  necessary  functions  of  government  to  those  of  a 
commercial  nature,  difficulties  multiply,  and  evils  widen  into  a  sea. 
The  post  office  business  has  been  taken  as  an  example.  Yet  the  post 
office,  as  a  business,  is  comparatively  simple.  Unlike  the  railroad, 
telegraph  or  telephone,  it  has  practically  no  "plant"  to  look  after,  no 
complicated  equipment  to  worr}-  about,  no  intricate  organization  to 
maintain.  As  Professor  Daniels,  recently  appointed  Interstate  Com- 
merce Commissioner,  has  pointed  out:  "Where  other  enterprises  call 
for  venturesomeness  and  speculative  activity,  the  post  office  requires 
orderly  routine ;  where  the  former  demand  much  fixed  capital,  the 
post  needs  comparatively  little ;  where  in  ordinary  business  transactions 
prices  vary  for  the  same  service,  the  post  office  has  always  one  price 
for  the  same  service ;  *  *  *  where  the  freight  agent  is  puzzling 
over  a  complicated  tariff,  the  postal  clerk  has  the  same  simple  regula- 
tions to  guide  him  today  and  tomorrow." 

There  is  no  need  to  theorize  on  this  subject.  Foreign  governments 
have  furnished  a  striking  object  lesson  of  this  truth,  for  which  chapter 
and  verse  can  be  cited.  If  we  take  a  single  utility,  the  telephone,  and 
trace  its  management  under  the  various  foreign  governments  which 
have  assumed  its  operation,  we  learn  a  story  of  neglect  and  starvation 
to  which  this  utility  has  been  subjected,  with  grave  and  far-reaching 
results,  for  which  our  government,  fortunately,  can  furnish  no  parallel. 

The  telephone  service  in  Great  Britain  is  operated  by  the  govern- 
ment, which  assumed  complete  control  about  two  years  ago.  The 
rapid  deterioration  in  telephone  service  which  has  followed,  has  raised 
a  veritable  stonn  of  protest  and  disapprobation,  which  even  the  strong- 
est opponents  of  Government  Ownership  did  not  dare  to  predict.  The 
British  press  teems  with  editorial  attacks  upon  the  management,  with 
letters  from  irate  subscribers  bitterly  condemning  the  service,  with 
accounts  of  delays,  mismanagement  and  confusion  in  the  handling  of 
the  enterprise  by  the  government.  All  this  is  heaped  upon  the  head 
of  the  Postmaster-General,  who  has  charge  of  the  service.  Members 
of  Parliament  protest  in  heated  speeches,  and  blame  the  Postmaster- 
General  ;  Chambers  of  Commerce  send  deputations  laden  with  petitions, 
and  blame  the  Postmaster-General ;  writers  satirize,  speakers  anathe- 
mize,  and  business  men  expostulate, — and  all  blame  the  Postmaster- 
General.  Only  the  Postmaster-General  himself,  perhaps,  and  one  or 
two  of  the  more  sober  members  of  Parliament,  realize  that  the  trouble 
with  the  service  has  been  the  trouble  with  the  government  itself.  The 
Honorable  C.  S.  Goldman,  M.  P.,  has  put  the  whole  matter  in  a 
nutshell : 

"Telephones  in  this  country  were  a  private  commercial  venture.  The 
Government  owned  the  telegraph  and  tried  to  throttle  the  telephone.  In 
1892  the  Government  forced  the  company  to  sell  its  trunk  lines,  and  although 
it  has  made  a  parade  of  figures  showing  the  large  amount  of  mileage  of  trunk 
lines  added,  the  service  has  never  kept  pace  with  public  requirements,  and 
there  has  been  a  constant  stream  of  complaints  from  Chambers  of  Commerce 
and  other  public  bodies,  as  well  as  from  individual  users.     The  truth  is  the 

6 


Government   made   a   Cinderella   of   the   trunk   lines,   to   the   end   that   their 
favoured  telegraph  should  remain  the  belle  of  the  wires. 

"In  1898  they  went  further.  They  themselves  started  competing  in  Lon- 
don, and  cajoled  provincial  municipalities  to  do  the  s.nme.  Disappointment 
and  failure  again!  But  a  harassing  failure  to  the  Telephone  Company  and 
the  customers  of  all  services.  So  in  1904  an  agreement  was  made  to  pur- 
chase in  1911  the  company's  undertaking.  As  to  the  price.  I  say  nothing. 
I  am  merely  thinking  of  public  convenience  and  an  efficient  service.  But  as 
to  the  Government's  inaction  between  1904,  when  they  became  potential  pur- 
chasers, and  1911.  when  they  were  actual  possessors.  I  have  to  say  much. 
The  company  had  contracted  to  sell  at  tramway  prices.  On  that  basis  they 
could  not  be  expected  to  develop  and  substantially  maintain  the  service.  The 
Government  had  a  price  contract  with  a  time  fixed,  and  they  had  accepted 
the  responsibility  for  the  efficiency  of  the  service  in  the  future.  They  could 
and  they  should  have  arranged. 

"It  was  the  duty  of  the  Government,  having  assumed  by  that  agreement 
the  responsibility  of  providing  the  service  from  January  1,  1912,  to  insure 
that  when  that  time  came  everything  should  be  in  readiness  for  the  great 
development  of  the  service,  which  they  themselves  from  time  to  time  stated 
would  take  place  when  they  took  over  the  plant.  They  could  and  they  should 
have  arranged  with  the  National  Telephone  Company  that  the  company  should 
have  continued  its  normal  operations,  but  that  ample  provision  for  the  after- 
purchase  period  should  be  made  at  the  expense  of  the  Post  Office. 
•  ***•  ••*«*•• 

"Beyond  the  provision  of  the  new  exchanges  at  Avenue  and  exten- 
sions to  a  few  of  his  own  exchanges,  there  is  no  evidence  that  the  Post 
Office  took  any  steps  in  the  matter,  and  these  operations  were  largely  under- 
taken in  order  to  avoid  purchasing  the  corresponding  exchanges  of  the  com- 
pany— an  attempt  wnich  was  not  successful.  In  fact,  what  the  Government 
in  effect  did  do  was  to  paralyze  the  service  for  seven  years,  so  that  they 
might  buy  it  cheaply,  and  then — well,  every  telephone-user  knows  what  he 
has  dropped  into.  Even  the  Postmaster-General  had  to  admit  that  the  opera- 
tions were  bungled." 

It  is  the  same  trouble,  the  joint  off-spring  of  the  fiscal  theory  and 
political  practice  inhering  in  all  governments, — the  fatal  gap  between 
the  public  purse  and  the  public  plant, — which  has  been  responsible  for 
Great  Britain's  telephone  plight  today;  so  subtle,  that  few  Britons 
besides  Goldman  have  been  able  to  perceive  it;  so  deepnseated  and 
vital,  that  all  the  Postmaster-General's  desperate  efforts  to  improve 
the  telephone  service  have  proved  of  little  avail. 

If  we  turn  to  France,  we  find  the  lights  and  shadows  in  the  pic- 
ture of  government  mismanagement  still  more  clearly  portrayed.  The 
French  government  acquired  a  complete  monopoly  of  the  telephone 
service  as  early  as  1889.  The  French  telephone  service  is  today — if 
we  may  accept  a  characterization  made  by  French  government  officials 
themselves, — the  worst  that  can  be  found  in  any  of  the  larger  civilized 
countries  of  the  world.  The  service  is  so  slow  and  unreliable,  that 
business  men  frequently  employ  messengers,  instead  of  resorting  to 
the  telephone.  In  service  between  cities,  communication  is  often  more 
rapid  by  railroad  than  by  telephone.  And  back  of  it  all  we  find  the 
same  reason :  lack  of  systematic  financial  management,  inherent  and 
unavoidable.  The  head  of  the  telephone  service  will  submit  to  the 
Chamber  of  Deputies  a  hundred  chapters  of  minute  and  elaborate 

7 


statistics.  "We  must  have  so  and  so  many  francs  for  construction 
and  improvement,  or  the  telephone  service  will  continue  to  deteriorate." 
The  appropriating  body  will  receive  the  demand,  and  with  it,  perhaps, 
hundreds  of  chapters  of  statistics  from  other  departments.  Nearly 
800  chapters  are  sometimes  submitted  by  the  twelve  ministers  who 
constitute  the  department  heads  in  France.  The  budget  committee  is 
literally  swamped  with  statistics.  Even  if  the  members  were  entirely 
free  from  political  considerations,  they  could  not  possibly  frame  a 
proper  business  judgment  on  the  needs  of  each  service.  The  outcome 
is  only  natural.  The  telephone  administration  may  ask  for  an  appro- 
priation of  a  hundred  million  francs  to  carry  out  a  wise  plan  of  con- 
struction and  equipment,  which  would  result  in  annual  economies  and 
bring  the  telephone  service  up  to  the  requirements  of  the  public.  The 
call  is  simple:  "A  stitch  in  time,  to  save  ninety  and  nine."  But  if  the 
appropriating  body  considers  it  better,  politically,  to  expend  money 
for  warships,  or  waterways,  or  public  buildings,  the  telephone  budget 
will  be  cut  in  two,  and  the  telephone  department  must  shift  as  best  it 
can  on  "short  rations."  This  may  mean  no  rations  at  all,  for  a  hun- 
dred millions  may  be  an  absolute  minimum,  without  the  expenditure 
of  which  the  proposed  construction  would  be  useless.  Here  is  the 
story  of  Deputy  M.  T.  Steeg,  (translated  from  one  of  the  French 
Senate  Documents) : 

"The  history  of  the  telephone  is  only  the  story  of  successive  programs, 
very  brilliantly  conceived,  but  never  realized  for  lack  of  resources. 

"In  1889,  after  the  purchase  of  the  private  exchanges,  the  multiple  switch- 
board appeared  in  the  United  States.  The  Administration  should  at  once 
have  abandoned  the  old  boards  which  the  "Societe  General  des  Telephones' 
had  left  us.  Thus  came  about  the  complications  and  delays  which  our  old 
Paris  subscribers  still  remember. 

"Again  in  1894  a  program  of  extension  of  the  telephone  system  was 
worked  out.  This  provided  for  the  construction  of  six  new  Centrals  and 
was  to  be  carried  out  within  two  years. 

"Next  a  new  system  of  operation,  introduced  in  1900,  obliged  the  Admin- 
istration to  perfect  its  material.  This  work,  which  the  Administration  prom- 
ised to  finish  in  a  short  time,  was  not  even  finished  in  1905.  In  fact  it 
never  was,  for  technical  progress  had  then  already  condemned  these  former 
methods  of  operation.  After  1905,  the  Administration  abandoned  the  ancient 
conceptions,  and  the  program  of  1906  substituted  at  last  the  central  battery 
system.  But  instead  of  replacing  at  once  the  old  apparatus  with  new,  the 
Department  tried  to  transform  and  adapt  existing  apparatus,  an  economy 
which  cost  the  Paris  system  three  years  of  bad  service. 

"The  transformed  apparatus  was  worn  out  at  the  end  of  four  years  but 
funds  to  replace  it  were  lacking.  The  Administration  could  not  borrow  the 
money  needed,  and,  therefore,  was  forced  to  resign  itself  to  its  fate. 

"The  flat  rate  subscription  is  costly  and  prohibitive  for  a  large  number 
of  individuals.  A  decision  of  May  7,  1901,  promised  a  reduction  to  300  francs 
which  has  never  been  realized.  The  preceding  government  had  issued  a 
decree  intending  to  substitute  for  the  flat  rate  the  message  rate.  For  this  it 
needed  33  million  francs  to  carry  on  the  work  of  building  new  offices  and 
for  installing  new  apparatus.  But  where  to  find  the  money!  As  the  General 
Budget  refused  to  advance  so  large  a  sum,  it  was  proposed  to  use  the  gross 
receipts  of  the  interurban  circuits  after  reimbursing  in  a  luirp  sum  the  dcpart- 

8 


ments.  This  amount  was  to  be  used  for  reorganizing  the  Paris  system  by 
delaying  the  development  of  the  provincial  telephone  lines.  The  Budget  Com- 
mission opposed  this  measure. 

"Next  M.  Millerand  took  up  the  study  of  the  bill,  completed  a  program 
of  reforms  and  was  looking  for  a  disinterested  person  who  would  lend  him 
the  100  million  francs  needed  to  effectuate  the  plan.  Not  being  able  to  borrow 
for  the  needs  of  the  service  the  .Administration  asked  the  Chamber  of  Com- 
merce of  Paris  to  do  what  the  .-Vdministration  itself  was  incapable  of  doing." 

Sometimes  the  French  government,  to  make  up  for  its  neglect 
in  past  years,  will  furnish  an  extra  heavy  appropriation.  The  result, 
of  course,  is  not  a  healthful  replenishment,  but  a  glut.  Extravagant 
and  careless  expenditure  become  the  order  of  the  day.  An  example 
of  this  is  the  elaborate  central  station  which  was  recently  built  in  the 
Rue  des  Archives,  Paris.  This  structure,  which  one  Frenchman  char- 
acterized as  "the  Babylonian  palace  of  Parisian  telephony,"  cost 
upwards  of  7,000.000  francs.  Architecturally,  it  is  beautiful.  Tele- 
phonically,  it  is  a  farce.  It  was  built  to  accommodate  a  section  having 
3,000  subscribers.  The  annual  rate  of  increase  in  subscribers  at  that 
point,  as  estimated  in  the  French  Budget  Report,  is  120.  The  two 
switchboards  in  this  section  are  designed  to  accommodate  20,000  sub- 
scribers, leaving  17,000  lines  unused.  On  this  basis,  it  will  take  140 
years  before  the  switchboards  will  come  into  full  use !  "After  an 
attempt  such  as  this,"  ironically  observes  the  Official  Budget  Reporter, 
"will  anyone  dare  to  accuse  the  Administration  of  lack  of  foresight?" 

A  striking  example  of  the  star\ation-by-neglect  tendency  of  gov- 
ernment management  is  that  of  the  Gutenberg  exchange,  in  Paris. 
After  a  dozen  years  of  telephone  stagnation — during  which  period 
there  were  years  in  which  no  telephone  appropriations  were  made  at 
all,  and  years  when  appropriations  were  so  large  that  they  could  not 
be  used  before  they  were  withdrawn — the  government  installed  the 
"common  battery"  system  in  the  Gutenberg  exchange.  This  system 
had  long  since  been  adopted  in  America ;  but  in  France  it  was  still 
regarded  as  a  new  improvement.  Xo  sooner  was  the  system  installed, 
than  the  French  government  was  warned  that  it  should  provide  ade- 
quate electrical  protective  apparatus  to  avoid  trouble  from  high- 
voltage  currents.  But  the  warning  fell  on  deaf  ears.  The  government 
felt  that  it  had  spent  enough.  The  result  was  a  conflagration,  which 
completely  reduced  the  exchange  to  junk  and  ashes,  and  left  a  large 
section  of  the  city  stranded  without  telephone  communication.  This, 
again,  was  called  an  "accident,"  just  as  the  New  York  Harbor  episode 
was  called  an  "accident."    It  was  not  an  accident;  it  was  a  result. 

In  Germany,  we  might  expect  an  exception  to  the  rule.  Germany, 
unlike  more  democratic  countries,  is  comparatively  unburdened  with 
numerous  checks  and  balances,  with  frequent  rotations  in  office  and 
consequent  changes  in  management  and  policy.  It  would  be  reason- 
able to  assume,  at  any  rate,  that  if  there  is  any  country  whose  govern- 
ment should  approximate  the  stability  and  efficiency  of  private  man- 
agement, Germany  is  that  country.    What  have  been  the  results? — in 

9 


the  telephone  field,  for  example,  to  pursue  the  illustration  which  has 
been  adopted. 

The  German  Empire  provides  a  government  owned  telephone 
service,  in  conjunction  with  a  government  owned  telegraph  service. 
The  condition  of  the  German  telephone  service  is  best  indicated  by 
the  circumstance  that,  in  the  fall  of  1912,  the  Imperial  Administra- 
tion decided  to  send  three  of  its  engineering  officials  to  America,  ac- 
companied (to  quote  the  Berlin  cablegram  published  in  the  New  York 
Times)  by  "the  hopes  and  prayers  of  business  men  and  householders." 
"The  trip  is  undertaken,"  read  the  report,  "with  a  view  to  introducing 
radical  and  much-needed  reforms  in  the  antiquated  German  telephone 
system.  Telephones  are  cheap  in  Germany,  but  have  few  other  virtues. 
The  average  office  and  house  telephone  in  the  biggest  cities  costs  $50 
a  year,  and  long  distance  messages,  regardless  of  mileage,  cost  25 
cents  apiece  between  any  points  for  three  minutes.  In  other  respects," 
the  news  item  goes  on  to  say,  "the  service  is  abominable.  Telephoning 
after  10  o'clock  at  night  in  cities  costs  5  cents  extra  per  conversation, 
and  connections  are  possible  only  after  a  delay  of  three  to  five  min- 
utes, owing  to  the  reduction  of  the  daytime  staff  by  about  75  per  cent." 

The  German  Telephone  Administration  has  been  particularly  criti- 
cized for  its  lack  of  adequate  toll  facilities.  The  government  will 
usually  maintain  only  as  many  long  distance  telephone  lines  as  are 
sufficient  for  official  purposes,  so  that  if  a  citizen  wants  a  long  distance 
call  immediately,  he  pays  a  premium  for  the  privilege.  It  is  not  an 
uncommon  occurrence,  in  Germany,  to  stand  in  line  for  an  out-of- 
town  call  for  hours,  only  to  be  told  by  a  government  official  that  the 
trunks  are  all  engaged. 

Apologists  have  sought  to  explain  away  these  conditions,  by  assert- 
ing that  the  telephone  service  in  Germany  was  never  designed  to  be 
primarily  commercial,  but  is  rather  in  line  with  the  fulfilment  of  a 
military  and  political  function,  originated  in  Bismarck's  policy  of 
railway  nationalization.  The  explanation,  however,  does  not  possess 
the  merit  of  explaining,  for  Germany  has  tried  in  vain  to  place  its 
telephone  service  on  a  commercial  basis.  Its  very  failure  to  do  this 
reveals  the  true  cause  of  German  telephone  conditions,  and  only  fur- 
nishes another  illustration  of  the  unavoidable  limitation  to  which  all 
governments  are  subjected,  by  the  controlling  principle  of  governmental 
expenditure.  We  can  get  "behind  the  scenes"  if  we  but  glance  at  the 
German  budgetary  appropriations  for  telephone  service  through  a 
series  of  years. 

In  1904,  the  telephone  appropriation  was  22,000,000  marks.  In 
1905,  it  went  up  to  27.000,000.    It  continued  to  go  up.  in  1906,  1907  and 

1908,  to  38.000.000  to  45,000.000  and,  finally,  to  59.000,000.  Then, 
just  as  the  telephone  service  was  beginning  to  respond  to  the  increased 
investment,  the  appropriation  was  arbitrarily  cut  to  42,000.000  marks  in 

1909.  and.  again,  to  25,000,000  marks  in  1910.  Naturally,  plans  were 
demoralized,  the  service  took  a  slump,  and  criticism  became  widespread. 

10 


"A  leading  German  newspaper,"  said  the  New  York  Press,  in  giving 
an  account  of  the  popular  dissatisfaction  which  followed,  "points  out 
that  of  the  25,000,000  marks  only  1,700,000  marks  is  to  be  used  for 
trunk  wires,  against  14,000.000  in  the  previous  year,  and  only  13,000,- 
000  is  to  be  used  for  extension  of  the  system,  while  16,000,000  was 
asked  for  that  purpose  in  1909.  With  the  specified  amount  of  13,000,- 
000  marks,  it  is  contended,  it  will  require  the  greatest  economy  to 
supply  all  the  required  new  connections  for  which  there  is  likely  to  be 
a  demand.  The  fact  that  such  a  demand  will  exist  is  based  on  figures 
showing  that  the  number  of  new  stations  has  increased  largely  in 
each  year  since  1899  except  1908.  The  appropriation  for  trunk  wires 
is  for  the  improvement  of  the  long-distance  service,  and  is  considered 
too  small  because  of  constantly  increasing  traffic.  *  *  *  It  is 
pointed  out  that  France,  by  allowing  only  small  amounts  for  telephone 
purposes,  has  come  to  face  the  problem  of  renewing  an  antiquated 
system  at  double  cost,  and  that  is  construed  as  a  warning  to  Germany." 

All  this,  however,  was  of  no  concern  to  the  Imperial  Government ; 
for  in  1911,  the  telephone  allowance  was  cut  down  still  further  to 
22,000,000  marks.  The  appropriation,  clearly,  was  not  to  depend  upon 
telephone  requirements:  the  telephone  business  was  to  wait  upon  the 
appropriation.  It  is  therefore  not  difficult  to  understand  why,  despite 
the  usual  reserve  maintained  by  Gennan  newspapers  in  their  criticism 
of  government  enterprises,  the  Deutsche  Zeitung  observes  that  "Herr 
Reinhold  Kraetke,  State  Secretarj'  of  the  Imperial  Post  Office,  doubt- 
less is  of  the  honest  opinion  that  everything  is  running  smoothly  under 
his  administration.  *  *  »  but  the  inefficiency  of  the  Berlin  tele- 
phones continues  to  increase  from  year  to  year,  and  sooner  or  later 
conditions  will  be  as  bad  as  they  are  in  Paris.  Whoever  has  tele- 
phoned, or,  rather,  tried  to  telephone,  in  Paris,  knows  that  he  fails 
about  ninety-nine  times  out  of  a  hundred  to  get  the  connection.  For 
the  most  part,  central  does  not  answer  at  all  and  if,  after  a  long  wait, 
she  does  answer,  she  gives  the  wrong  number.  And  here  the  matter 
ends.  The  time  sf)ent  in  telephoning  is  so  much  time  wasted.  In 
Berlin,  things  have  not  yet  reached  such  a  state  of  demoralization,  but 
they  are  fast  approaching  it." 

The  Zeitung,  like  many  of  the  other  German  newspapers,  saw 
only  the  result,  and  mistook  the  cause  as  personal.  It  is  not,  of  course, 
Herr  Kraetke,  nor  any  other  German  official,  who  is  responsible  for 
the  present  condition  of  the  German  telephone  service,  but  the  sheer 
inapf>ropr lateness  of  governmental  machinery  to  the  management  of 
a  commercial  utility  upon  a  commercial  basis;  an  inherent  defect,  not 
German,  but  governmental.  This  is  strikingly  brought  out  by  the  fol- 
lowing illustration. 

For  years,  the  German  Telephone  Administration  has  been  strug- 
gling to  eflfect  a  single  change  in  policy — the  revision  of  a  rate  schedule 
which  daily  grows  more  inadequate  and  troublesome.  The  rate  sched- 
ule now  in  force  in  Germany  was  put  into  effect  in  1899.    In  1906  the 

11 


government  awoke  to  the  fact  that  the  rates  had  become  obsolete,  and 
utterly  unsuited  to  the  needs  of  the  sen-ice.  There  was  rank  dis- 
crimination between  the  city  and  country  districts.  Complaints  in- 
numerable kept  Inuring  in,  and  business  was  suffering  badly.  Ordi- 
narily, a  private  concern  would  have  been  forced  to  settle  the  matter 
in  a  few  months,  or  a  half  year  at  the  most.  But  here  is  a  brief  sum- 
mary of  the  action  taken  by  the  German  government : 

On  March  10,  1906,  the  Reichstag  passed  a  resolution  "that  an  equitable 
distribution  of  costs  between  city  and  country  districts  be  introduced."  No 
action  for  nearly  a  year. 

On  May  3,  1907,  the  Reichstag  again  passed  the  same  resolution.  No 
action  for  seven  months. 

On  December,  1907,  the  Imperial  Telegraph  Administration  published  a 
"Memorial  on  the  Changing  of  the  Telephone  Rate  Law,"  with  suggestions 
as  to  the  changes  desired.  The  plan  was  submitted  to  a  commission.  The 
commission  cut  out  some  of  the  suggestions,  substituted  others,  and  passed 
the  matter  back  to  the  Administration.  The  Administration  framed  a  Revised 
Bill.    No  action  for  more  than  a  year. 

On  February  8,  1909,  the  Revised  Bill  was  submitted  to  the  Reichstag. 
The  Bill  was  favorably  received  by  the  Reichstag,  and  turned  over  to  the 
Budget  Committee.    Then  the  Reichstag  closed.    No  action  for  eight  months. 

On  November  29,  1909,  the  Bill  was  again  submitted  to  the  Reichstag  for 
final  consideration.    No  action  for  five  months. 

In  the  latter  part  of  April.  1910,  the  Reichstag  again  turned  the  Bill 
over  to  the  Budget  Committee  for  report.    No  action  for  seven  months. 

On  December  6,  1910,  the  Budget  Committee  submitted  a  report,  modify- 
ing the  previous  scheme  of  reform  submitted  by  the  Administration.  The 
result  was  a  compromise,  to  which  the  Administration  agreed,  and  a  new 
Revised  Bill  was  sent  to  the  Reichstag  for  a  second  reading.  The  Reichstag 
referred  it  back  again  to  the  Budget  Committee.  No  action  for  several 
months. 

On  May  4.  1911,  the  Bill  was  again  considered  by  the  Budget  Committee. 
A  new  compromise  bill  was  drawn  up,  which  met  with  such  bitter  opposition 
that  the  Budget  Committee  adjourned  without  reaching  a  final  conclusion. 

There  has  been  no  report  of  action  since :  only  the  Zeitschrift  fiir 
Schwachstromtechnik  in  February,  1912,  reported  the  following  inter- 
esting development:  "The  make-up  of  the  old  Reichstag  left  little 
ground  for  the  hope  that  the  prop>osal  for  a  new  telephone-rate  law, 
whicli  was  advanced  by  the  Government,  would  meet  with  a  favorable 
reception,  in  spite  of  the  fact  that  the  proposition  had  undergone 
drastic  changes  in  the  Commission.  The  recent  elections  have  brought 
about  such  a  change  in  the  relative  strength  of  the  parties,  that  even 
that  last  version  of  the  proposal,  for  which  a  majority  could  have  been 
won  in  the  old  Reichstag  only  with  the  greatest  difficulty,  has  become 
utterly  hopeless." 

Enough  has  been  said,  perhaps,  to  indicate  that  even  Germany, 
with  all  the  alleged  vigor  of  a  monarchical  and  centralized  administra- 
tion, has  been  unable  to  escape  the  inexorable  principle  that  a  govern- 
ment, by  the  verj'  nature  of  its  make-up,  is  incapable  of  attending  to  a 
commercial  utility  with  anything  like  the  benefit  to  the  public  which 
can  be  furnished  by  private  enterprise. 

12 


One  more  example  may  be  cited — that  of  Australia — because 
Australian  conditions  are,  in  many  respects,  closely  similar  to  those  in 
the  L'nited  States.  The  telephone  service  in  Australia  was  originally 
administered  by  the  various  states  which  make  up  the  Commonwealth ; 
but  in  1901,  the  Commonwealth  itself  assumed  entire  management  of 
the  telephones.  It  was  hoped,  by  this  change,  that  flagrant  evils  in 
the  public  administration  of  the  ser\-ices  would  be  eliminated  by  con- 
solidation under  the  Commonwealth.  But  conditions  did  not  improve; 
if  anything,  they  became  worse ;  so  that,  after  years  of  mismanage- 
ment, public  clamor  grew  so  strong  that  a  Royal  Commission  was  ap- 
pointed to  investigate  the  Post,  Telegraph  and  Telephone  ser\'ice,  to 
determine,  if  possible,  the  source  of  the  trouble.  The  Commission 
issued  its  report  in  October,  1910.  On  the  whole,  it  is  one  of  the 
severest  arraignments  which  has  ever  been  made  by  a  body  of  public 
officials  against  government  mismanagement  of  a  public  utility.  But 
it  is  particularly  noteworthy  in  this  respect:  it  places  the  finger  pre- 
cisely on  the  sore  spot  of  the  whole  system.  This  is  what  the  Com- 
missioners found: 

"The  reason  assigned  by  all  the  officials  fo.-  the  failure  to  place  the 
services  in  proper  working  order  was  want  of  sufficient  funds.  There  is 
evidence  that  the  Department  in  1901  endeavoured,  through  the  Treasurer  of 
the  time,  to  obtain  the  necessary  funds  to  place  the  services  in  an  efficient 
condition  by  resorting  to  a  loan,  but  Parliament  refused  to  sanction  this 
proposal.    •    •     •    • 

"The  result  of  unduly  curtailing  expenditure  was  pointed  out  repeatedly 
by  the  Department,  and  the  required  provision  was  made  on  the  Estimates, 
but  was  reduced  by  the  Treasurer.  The  longer  reconstruction  is  deferred  and 
the  longer  installation  of  a  new  system  is  postponed  the  more  expensive  the 
work  becomes,  on  account  of  extensions  made  to  the  old  system.  Construc- 
tion methods  were  found  to  be  practically  the  same  as  in  1901,  as  the  Depart- 
ment claimed  it  had  been  impossible  to  improve  those  methods  since  that 
date,  although  the  adoption  of  improved  methods  would  obviously  have  tended 
towards  economy.  It  may  be  mentioned  that  between  1886  and  1904  the  New 
York  Telephone  Company's  plant  was  reconstructed  three  times  to  bring  the 
equipment  up  to  the  highest  standard,  and  to  render  the  service  more  efficient. 
From  1900  to  1907  the  Bell  Telephone  Company,  United  States  of  America, 
spent  about  £70,000,000  on  telephone  undertakings." 

The  Commission  then  goes  on  to  describe  the  antiquated  switch- 
boards, ill-kept  lines,  impaired  efficiency  and  general  demoralization  in 
service,  which  naturally  flowed  from  the  policy  of  financial  starvation 
that  characterized  the  government's  management  from  the  start. 

And  so  we  might  go  on,  pointing  the  moral  from  the  other  govern- 
ments which  have  assumed  the  telephone  business, — Austria,  Italy, 
Switzerland  and  the  rest.  It  is  the  same  story  in  each  case,  recalling, 
with  peculiar  aptness,  Macaulay's  description  of  Johnson's  early  con- 
temporaries: "They  knew  luxury,  they  knew  beggar}',  but  they  never 
knew  comfort."  The  government  telephones  know  extravagance,  they 
know  penury,  but  they  never  know  that  continuous  and  comprehensive 
financing,  without  which  an  adequate  service  is  impossible.  In  each 
case  we  see  the  same  characteristic  in  varying  guises :  an  inherent 

13 


incapacity  to  administer  a  commercial  utility  vAth  anything  like  the 
efficiency  and  promptness  of  which  it  is  capable,  all  due  to  a  definite 
and  natural  limitation  to  which  governments  are  subject, — as  definite 
and  natural  as  that  which  has  decreed  that  the  brain  shall  not  assume 
the  functions  of  the  stomach,  the  liver  or  the  heart. 

In  the  United  States,  happily,  the  government  has  retained  its 
natural  supervisory  function, — that  of  a  brain,  if  you  please.  Recog- 
nizing that  a  government  is  far  better  able  to  regulate  and  check  abuses 
of  private  corporations,  than  to  regulate  and  check  its  own,  it  has  so 
far  steered  clear  of  attempting  functions  for  which,  by  its  \try  nature, 
it  was  never  intended ;  and  the  result  has  been  decidedly  fortunate  for 
Americans.  In  marked  contrast,  for  instance,  to  the  various  govern- 
mental telephone  services  we  have  described,  the  high  stage  of  perfec- 
tion reached  by  the  American  telephone  service,  so  admired  by  foreign- 
ers visiting  this  country,  stands  out  as  an  illustration  of  what  may  be 
expected  when  the  development  of  a  commercial  utility  is  allowed  to 
proceed  along  natural  lines.  And  precisely  the  element  which  is  lack- 
ing in  governmental  administration  has  been  responsible  for  the  effi- 
ciency and  despatch  afforded  by  private  enterprise :  the  deliberate 
mapping  out  of  a  policy,  the  laying  of  plans  and  the  spending  of  money, 
not  only  for  the  day,  not  only  for  the  morrow,  but  for  the  next  year, 
and  the  next  ten  or  twenty  years.  It  is  clear  that  this  element  cannot 
be  present,  but  for  an  absolute  guaranty  of  stability  for  a  definite 
period  of  time  in  the  future:  a  complete  freedom  from  the  gusts  of 
opposing  policies,  political  or  otherwise, — an  atmosphere  of  reason- 
able expectation  that  deliberate  and  painstaking  planning  will  be 
followed  by  equally  deliberate  and  painstaking  execution. 

There  is  not  a  government  on  the  face  of  the  earth  capable  of 
this  sort  of  management.  No  government  has  been  able  to  escape  the 
natural  law  that  all  organisms,  political  as  well  as  individual,  have  a 
definite  limitation  of  functions  stamped  upon  them,  beyond  which  they 
cannot  step,  save  with  hann  to  themselves  and  others.  Numerous 
arguments  have  been  advanced  against  government  ownership:  the 
impairment  to  the  fundamental  and  primary  functions  of  government 
which  comes  from  tlirowing  onto  its  already  overburdened  shoulders, 
new  and  vastly  more  complicated  duties ;  the  increased  opportunities 
for  political  corruption ;  the  undue  political  influence  of  a  growing 
army  of  civil  service  employes,  who,  by  their  votes,  can  force  ini- 
moderate  class  legislation  at  the  expense  of  the  public ;  the  undemocratic 
trend  toward  centralization,  militarism  and  bureaucracy,  with  its  ten- 
dency to  subject  individual  liberty  to  a  petty  officialdom;  improper  rate 
making  forced  by  political  pressure,  producing  deficits  which,  through 
taxation,  must  fall  on  user  and  non-user  alike;  arbitrary  treatment  of 
consumers,  inspired  by  the  knowledge  that  from  government  there 
can  be  no  appeal, — all  these  arguments  have  been  advanced,  from  time 
to  time,  against  the  proposition  of  government  ownership  in  this  coun- 
try.    But  in  the  last  analysis,  it  will  be  seen  that  these  considerations 

14 


either  spring  from  or  center  about  a  primary  law, — the  natural  and 
inherent  limitation  of  governments:  that  governments  were  never  in- 
tended to  create,  but  to  conserve  and  protect ;  that  a  government  is 
most  beneficial  when  it  refuses  to  overstep  its  natural  limitation,  and 
guarantees  to  a  people  a  minimum  of  interference  with  individual 
liberty,  combined  with  a  maximum  of  protection  against  individual 
abuses. 

When  Socrates  said,  "Know  thyself,"  he  had  in  mind  the  disaster 
which  an  individual  invites  when  he  attempts  something  Nature  never 
fitted  him  for.  The  world  is  full  of  misfits  in  individual  vocations:  of 
bom  artisans  who  have  wasted  lives  trj'ing  to  practice  law ;  of  dismal 
failures  in  the  world  of  art,  who  might  have  been  fortunate  business 
men ;  of  mediocre  journalists,  who  might  have  starred  in  the  profes- 
sions. The  personal  tragedy,  in  each  case,  lay  in  a  failure  to  realize 
the  personal  limitation ;  in  attempting  what  might  better  have  been 
left  to  others.  Far  more  tragic,  because  more  far-reaching  and  perma- 
nent, is  it  for  a  government  to  attempt  what  it  is  inherently  incapable 
of  doing  well. 

This  country  was  born  simultaneously  with  the  awakening  of  a 
new  era  in  human  enterprise.  Its  progress  has  come  from  a  free  and 
untrammeled  expression  of  the  individual.  In  the  course  of  its  develop- 
ment, evils  have  sprung  up, — the  evils  of  individual  license.  Prominent 
among  them  have  been  the  corporate  abuses  from  which  the  public 
has  suffered  in  the  absence  of  sufficiently  prompt  and  adequate  inter- 
ference by  government.  The  result  has  been  some  sentiment,  of  late, 
for  ownership,  by  government,  of  the  more  important  utilities, — 
railways,  telegraphs  and  telephones.  But  we  shall  profit  little  indeed 
if,  to  right  one  evil,  we  establish  another  more  serious.  It  were  far 
better  for  government  to  emulate  the  example  of  the  human  will, 
which  guides  and  restrains  our  actions  when  they  become  immoderate, 
instead  of  assuming  the  various  functions  itself. 

It  is  probably  this  thought  that  President  Woodrow  Wilson  had 
in  mind,  when  he  said,  in  his  speech  before  the  Federation  of  Demo- 
cratic Qubs  in  Pennsylvania: 

"The  regulation  of  corporations  is  hardly  less  significant  and  central. 
We  have  made  many  experiments  in  this  difficult  matter,  and  some  of  them 
have  been  crude,  and  hurtful,  but  our  thought  is  slowly  clearing.  We  are 
beginning  to  see,  for  one  thing,  how  public  service  corporations,  at  any  rate, 
can  be  governed  with  great  advantage  to  the  public  and  without  serious  detri- 
ment to  themselves,  as  undertakings  of  private  capital.  Experience  is  removing 
both  prejudice  and  fear  in  this  field,  and  it  is  likely  that  within  the  very 
near  future  we  shall  have  settled  down  to  some  common  rational  and  effective 
policy.  The  regulation  of  corporations  of  other  sorts  lies  intimately  connected 
with  the  general  question  which  ramifies  in  a  thousand  directions,  but  the 
intricate  threads  of  which  we  are  slowly  beginning  to  perceive  constitute  a 
decipherable  pattern.  Measures  will  here  also  frame  themselves  soberly 
enough  as  we  think  our  way  forward." 

IS 


It  is  to  be  hoped  that,  in  untangling  the  "intricate  threads"  which 
constitute  the  "decipherable  pattern,"  the  Government  of  this  country 
will  avoid  the  pitfalls  into  which  foreign  governments  have  dropped, 
in  their  assumption  of  extra-governmental  functions.  The  knot  is  to 
be  untangled  by  the  deft  and  trained  fingers  of  scientific  government 
regulation,  rather  than  the  knife  of  government  ownership,  to  the 
end  that,  instead  of  a  jangle  of  frayed  and  twisted  government  enter- 
prises, we  shall  have  a  complete  and  harmonious  commercial  fabric, 
beneficial  to  public  and  public  utility  alike ;  and  the  growing  popularity 
of  our  public  regulating  commissions  is  a  hopeful  sign  that  the  genius 
of  American  institutions  is  beginning  to  compass  this  truth. 


BcT 


Htyid:ndJM^  l£.ief>kohe.  ^t\^/^/^  ^  '        ^' •   /^^.,  >, 

^     I   !  Suff>l.  ^"j  ^  ^-        _ 

Reprintid  frtm  the  " NineUrnth  Century  and  After"  J»r^Aui[ujt,   1^14  Allp   3         IQIC 

What  is  Wrong  with  the  Telephone         ^"'^^"SiTy  of  10^^^^ 

By  C.  S.  Goldman, 
Chairman  of  (British)  Parliamentary  Telephone  Committee. 


The  telephone  is  the  most  wonderful  and  least  ap- 
preciated of  the  marvels  of  modern  science.  It  is  the 
very  magic  carpet  of  fable,  transporting  its  owner  in 
a  flash  to  the  place  where  he  desires  to  be.  By  its  aid 
the  business  man  seated  in  his  City  office  can  be  one 
instant  instructing  his  agent  at  the  Docks  and  the  next 
arguing  with  his  wife  at  Richmond.  The  busy  house- 
wife can  do  her  shopping  without  stirring  more  than 
a  few  steps  from  the  nursery  door.  The  electric  cur- 
rent will  carry  the  human  voice  over  the  North  Downs 
and  across  the  trim  gardens  of  the  South,  under  the 
waters  of  the  Channel,  across  the  plains  of  Northern 
France,  and  deliver  it  easily  recognizable  in  Paris  in 
a  moment  of  time.  Nor  is  the  means  by  which  this 
miracle  is  performed  less  marvellous  than  the  result. 
The  electric  current  which  operates  the  telephone  is 
perhaps  the  gentlest  and  swiftest  thing  in  the  world. 
Any  description  of  it  must  seem  to  be  hopeless  exag- 
geration. It  is  about  one  five-millionth  part  of  the 
current  required  to  light  a  single  electric  lamp.  To 
use  a  picturesque  illustration  of  Mr.  H.  N.  Casson's, 
if  you  cool  a  spoonful  of  hot  water  one  degree  you 
will  have  released  sufficient  energy  to  run  a  telephone 
for  ten  thousand  years.  If  you  catch  the  falling  tear 
of  a  child  you  will  have  enough  water-power  to  carry 
your  voice  from  London  to  Paris. 

This  is  a  miracle,  but  in  order  to  make  miracles  of 
practical  utility  in  modem  life  it  is  required  that  they 
should  occur  when  they  are  wanted,  and  in  the  way 
that  is  wanted.  A  magic  carpet  that  suddenly  refused 
to  stir  when  the  proper  incantation  was  repeated 
would  become  unpopular,  and  even  more  annoyance 
would  be  caused  if,  instead  of  carrying  its  user  to  the 
office  where  he  wanted  to  be,  it  pitchforked  him, 
alarmed  and  angry,  into  the  back  drawing-room  of  a 
total  stranger.  That  is  what  the  telephone  here  is 
constantly  doing  to-day,  with  the  consequence  that 
people  are  tempted  to  attribue  to  the  telephone  itself 
faults  which  are  merely  due  to  the  system  under  which 


■7 


it  is  operated.  Every  nation  gets  the  telephone  system 
that  it  deserves,  and  we  have  fully  earned  all  the  ex- 
asperation that  we  have  to  endure  by  our  persistent 
refusal  to  recognize  the  change  which  the  advent  of 
the  telephone  has  brought  to  the  world.  The  postal 
service  transmits  a  letter,  the  telegraph  service  ^ends 
the  contents  of  the  letter,  but  the  telephone  communi- 
cates the  thought  behind  the  letter.  There  is  one  great 
fundamental  principle  of  telephony  which  is  too  little 
regarded  in  England,  and  that  is  that  every  telephone 
added  to  a  service  increases  the  value  of  all  telephones 
in  the  service.  We  still  do  not  realize  that  a  house 
without  a  telephone  is  as  obsolete  as  a  house  without 
a  bathroom.  We  are  still  content  to  be  twenty  years 
behind  the  times  in  our  telephone  system. 

For  an. idea  of  what  a  telephone  system  can  do  we 
have  to  look  to  America.  In  spite  of  the  fact  that  it 
was  largely  built  up  by  Englishmen,  the  telephone 
stands  as  the  one  characteristic  product  of  American 
civilization.  Not  a  very  lovely  product  perhaps,  not 
one  which  indicates  a  very  high  advance  in  the  scale 
of  civilization,  but  a  product  which  no  nation  which 
means  to  maintain  its  position  in  commerce  to-day  can 
afford  to  ignore  or  even  to  underestimate.  The  United 
States  adds  in  one  year  to  her  service  as  many  tele- 
phones as  are  comprised  in  the  entire  system  in  this 
country,  and  increases  the  mileage  of  her  telephone 
circuits  each  year  by  more  than  the  distance  between 
England  and  Australia.  In  the  States  every  alternate 
family  possesses  a  telephone.  There  the  low  charge 
of  9d  to  one  shilling  a  week  for  a  private  instrument 
has  enabled  two  and  a  half  million  farmers  to  be  in 
telephonic  touch  with  each  other  and  their  markets. 
Contrast  this  development  and  these  facilities  with  the 
opportunities  vouchsafed  to  only  two  thousand  farmers 
in  this  country.  It  is  possible  to  converse  from 
Denver  to  New  York,  a  distance  of  over  two  thousand 
miles,  without  straining  the  voice,  and  to  be  perfectly 
audible.     To-day  New  York  leads  the  world  with  u 


% 


)r^ 


\ 


\>r\eric(^-h~Jelep]n(ir\e  apdJele^Tapl  Co,     [Cor^tK)  I 


telephone  service  that  is  unapproachable  for  efficiency. 
If  you  mass  together  all  the  telephones  of  London, 
Glasgow,  Liverpool,  Manchester,  Birmingham,  Leeds, 
Sheffield,  Bristol  and  Belfast,  you  will  still  fall  short 
of  the  number  of  telephones  in  this  one  American  city. 
At  the  slackest  time  in  the  twenty-four  hours — that 
is  between  three  and  four  in  the  mornmg — there  are,  on 
an  average,  ten  calls  a  minute.     Between  eleven  and 
twelve  o'clock  180,000  conversations  take  place,  with 
an  average  of  fifty  new  calls  a  second.    The  business 
done  represents  every  department  of  human  activity. 
Contracts  are  made,   evidence  given,   lawsuits   tried, 
degrees  conferred,  proposals  of  marriage  made  and 
accepted,  voters  canvassed — all  by  means  of  the  tele- 
phone.    I  do  not  want  to  labor  comparisons,  but  it  is 
perfectly  obvious  that  here  in  England  we  are  still 
content  to  do  things  slowly  and  expensively  without 
the  teleplione  that  could  be  done  quickly  and  cheaply 
with  it.     The  first  thing  that  strikes  an  American 
coming  to  London  is  the  overcrowding  of  the  streets. 
He  sees  streams  of  messenger  boys,  clerks,  and  even 
business  men  walking,  flying  in  trains,  or  going  by 
'bus  or  underground.    In  Mew  York  there  is  not  half 
that  overcrowding.    Business  is  not  done  by  letter  or 
message  or  even  by  personal  interview.    It  is  done  by 
telephone.    The  London  Stock  Exchange,  the  biggest 
market-place  on  earth,  has  fifteen  telephone  lines;  the 
New  York  Exchange  has  641.    A  big  club  of  which  I 
am  a  member  has  6000  members  and  three  telephone 
lines.    On  an  average  three  hundred  men — almost  all 
of  them  busy  professional  men,  business  men,  or  mem- 
bers of  Parliament — lunch  there  every  day.    Yet  there 
is  only  one  telephone  line  for  every  hundred  of  tlieni. 
Every  member  of  the  House  of  Commons  has  had  ex- 
perience of  the  exasperating  inadequacy  of  the  tele- 
phone service  there.     In  Congress  every  member  has 
his  telephone. 

I  am  pomting  out  these  differences  not  in  order  to 
show  tliat  England  is  decadent  or  that  her  commercial 
position  is  doomed  or  anything  of  that  kind,  but 
merely  to  show  the  English  people  what  they  are 
missing  in  convenience  and  comfort  by  not  securing 
an  adequate  and  efficient  service.  At  the  present 
moment  such  service  as  we  have  is  regarded  as  a  lux- 
ury for  the  rich,  instead  of  being  accepted  as  a  neces- 
sity for  all.  For  every  person  in  the  United  Kingdom 
with  a  telephone  there  are  at  least  sixty-nine  without 


This  lack  of  telephones  lessens  the  value  of  the  whole 
service.  My  telephone  is  of  no  use  to  me  unless  the 
man  I  want  to  ring  up  has  got  one  too.  This  is  where 
the  telephone  system  here  is  being  hampered.  If  we 
had  the  same  telephone  service  in  proportion  to  our 
population  as  the  United  States  have,  with  its  9,000,000 
telephones,  we  should  have  about  3,650,000  tele- 
phones, instead  of  only  750,000.  In  that  case  every 
subscriber  would  have  five  times  the  present  facilities 
of  conversation.  Five  telephones  to  one  is  too  heavy 
odds  for  us  to  allow  our  commercial  rivals  to  have 
against  us  in  these  days  of  stress.  If  we  want  two 
keels  to  one  to  keep  our  shores  from  invasion,  we  want 
at  least  an  equal  proportion  of  telephones  to  keep 
our  business  from  destruction. 

There  is  a  curious  idea,  which  has  been  extensively 
spread  in  some  strange  way,  that  America  is  more 
suited  to  telephone  exploitation  than  this  country.  It 
is  true  that  in  America  distances  are  greater  and  con- 
parative  means  of  communication  less  efficient  than  in 
this  country.  But  that  made  the  task  of  linking  up 
America  by  telephone  harder  and  not  easier.  In 
America  they  had  to  face  and  subdue  natural  obstacles 
of  the  most  formidable  kind.  They  had  to  traverse 
great  forests  where  their  poles  looked  like  tooth-picks 
beside  the  enormous  trees.  They  had  to  drive  olf 
Indians  who  coveted  the  bright  wire  for  ear-rmgs  and 
bracelets,  and  the  bears  wUo  mistooK  the  humuiiug  ot 
the  wires  for  the  buzzing  ot  bees  and  persisted  in 
gnawing  down  the  poles.  In  England  we  had  no  such 
natural  difficulties  with  which  to  contend.  With  its 
natural  advantages,  its  small  area,  its  inter-dependent 
cities  and  counties,  it  is  an  ideal  place  for  the  develop- 
ment of  the  telephone.  Nor  can  it  be  held  that  the 
fact  that  otlier  means  of  communication  exist  jusiihes 
their  substitution  for  the  telephone.  The  use  of  the 
telephone  is  to  prevent  a  man  from  being  his  own 
errand-boy.  Because  you  can  do  a  journey  quickly 
by  tube  or  train  you  need  not  neglect  tlie  chance  of 
doing  it  quicker  still  by  telephone. 

This  fact  is  not  realized  in  England  because  tiie 
telephone  service  hjis  always  been  the  Cinderella  of 
English  life.  Indeed,  when  we  look  at  the  history  oi 
the  telephone  in  this  country,  it  seems  extraordinarj- 
that  it  has  even  survived  to  the  extent  that  it  has. 
When  the  telephone  was  first  introduced  into  England 
it  found  the  Government  staggering  under  one  of  the 


most  disastrous  financial  blows  that  it  had  ever  re- 
ceived :  the  failure  of  the  telegraph  service  to  pay  its 
way.  The  advent  of  the  telephone  put  Ministers  in  a 
difficulty.  If  they  bought  it,  the  result  might  be  that 
another  financial  failure  might  be  added  to  the  losses 
on  the  telegraphs,  which  they  already  felt  to  be  e.xces- 
sive.  If  they  let  it  alone,  it  might  cut  out  the  tele- 
graph service  altogether  and  leave  them  to  face  a 
total  loss  of  all  the  public  money  that  they  had  invested 
in  it.  The  dilemma  appeared  to  be  complete.  The 
Government  under  these  circumstances  decided  first 
of  all  to  get  control  of  the  new  service.  They  obtained 
a  decision  of  the  Courts  that  a  telephone  was  a  tele- 
graph. The  Act  of  Parliament  under  which  the  de- 
cision was  obtained  was  passed  six  years  before  a 
telephone  was  ever  constructed,  but  that  made  no 
difference.  The  leading  scientists  of  the  day,  includ- 
ing Tyndall  and  Lord  Kelvin,  warned  the  Government 
that  they  were  making  a  fatal  mistake,  but  they  were 
disregarded.  The  Post  Office  were  acting  as  the 
wicked  uncles  of  the  infant  service.  They  had  de- 
termined to  get  control  of  it  in  order  to  do  it  to  death 
in  some  hidden  and  secret  manner.  Very  soon  their 
policy  became  clear.  They  were  neither  prepared  to 
work  it  themselves  nor  to  allow  anyone  else  a  free 
hand  to  develop  it.  The  political  theorists  of  that  day 
believed  that  unrestricted  competition  was  the  only 
way  to  secure  business  efficiency.  So  licenses  to  or- 
ganize a  telephone  service  were  granted  to  thirteen 
different  companies.  We  can  faintly  imagine  the 
confusion  that  would  have  ensued  if  they  had  all  suc- 
ceeded, but  fortunately,  as  might  have  been  forseen, 
the  most  alert  and  most  energetic  quickly  swallowed  all 
the  rest.  But  even  this  repetition  of  the  miracle  of 
Aaron's  rod  did  not  soften  the  hard  and  jealous  heart 
of  the  Postmaster-General,  and  he  would  not  let  the 
telephone  service  go  free.  He  even  acted  so  far  upon 
Scriptural  precedent  as  to  increase  the  burden  of  its 
obligations.  The  Company  was  compelled  to  pay 
one-tenth  of  its  gross  earnings  to  the  Post-Office.  It 
had  to  hold  itself  in  readiness  to  sell  out  at  six 
months'  notice  at  any  time.  And  finally,  when  the 
Company  had  at  last  strung  a  long-distance  system  of 
wires,  the  Government  came  down  and  compelled  it 
to  sel5. 

The  root  cause  of  this  stroke,  which  has  been  as 
disastrous  financially  as  it  was  immoral  politically — the 


Post  Office  made  a  loss  last  year  of  15,0001.  over  the 
trunk  service — was  the  jealousy  of  the  telegraph  ser- 
vice. For  a  long  time  the  Post  Office  telegraphs  had 
been  envious  of  tiieir  younger  and  more  popular  rival. 
On  the  2nd  of  March,  1892,  the  then  Postmaster-Gen- 
eral, Sir  James  Fergusson,  had  to  confess  in  the  House 
of  Commons  that  "wherever  the  telephone  system  has 
been  principally  developed,  there  the  growth  of  the 
telegrapii  revenue  has  been  checked."  Instead  of  draw- 
ing the  obvious  conclusion,  that  the  public  had  begun 
to  recognize  the  increased  utility  and  efficiency  of  the 
telephone  over  the  telegraph,  and  trying  to  make  the 
new  service  as  popular  and  convenient  as  possible, 
the  Post  Office  adopted  the  opposite  policy.  It  expro- 
priated at  an  absurd  valuation  the  whole  of  the  Com- 
pany's long-distance  lines,  and  imposed  the  most  har- 
assing conditions  as  to  the  local  areas  in  which  the 
Company  might  work.  If  its  object  was  to  get  per- 
manent revenue  for  the  State,  experience  has  shown 
that  it  dismally  failed;  but  if  its  object  was  to  check 
the  development  of  the  telephone  service  in  England 
it  was  a  triumphant  success.  The  result  has  been  not 
to  transform  the  telegraphs  into  a  paying  concern, 
but  to  turn  the  trunk  lines  into  a  losing  concern — so 
much  for  Post  Office  control. 

The  next  chapter  in  this  miserable  story  of  admin- 
istrative failure  opens  in  1900,  when  the  Post  Office 
suddenly  repudiated  its  obligations  to  the  licensed 
Company  and  threw  open  the  door  to  general  compe- 
tition. That  action  knocked  twenty-five  per  cent,  off 
the  value  of  the  National  Telephone  Company's  secur- 
ities and  made  its  author,  Mr.  Hanbury,  a  member  of 
the  Cabinet ;  but  it  had  no  other  recognizable  results. 
The  Post  Office  tried  to  start  a  second  system  in 
London,  but  in  two  years  it  discovered  its  mistake  and 
had  to  ask  the  Company  for  its  assistance  and  co-op- 
eration. It  granted  licenses  to  cities  that  demanded 
municipal  ownership,  but  the  policy  of  mutual  throt- 
tling and  antagonistic  rivalries  between  them,  the 
Company,  and  the  Post  Office  system  resulted  in  inev- 
itable failure.  Glasgow,  for  instance,  spent  360,000/. 
on  a  plant,  ran  the  system  at  a  loss,  and  then  sold 
it  to  the  Post  Office  for  300,000/.  When  it  had  bought 
the  system  the  Post  Office  had  to  reconstruct  the 
main  exchange  and  replace  every  one  of  the  12,800 
subscribers'  telephones  in  use.  The  other  municipal 
telephones  came  to  the  same  end.     Brighton  sold  out 


to  the  Post  Office  with  a  loss  of  nearly  2500/,  and 
other  municipalities  had  to  sell  to  the  National  Tele- 
phone Company  at  considerably  less  than  the  service 
cost.     All    this    happened    because    the    Post    Office 
would  not  realize  that  no  telephone   service  can  be 
complete  or  efficient  unless  it  is  self-contained  and  un- 
hampered,   and    unless    it    is    national    in    its    scope. 
These  repeated  failures,  however,  did  succeed  in  driv- 
ing into  the  heads  of  the  Postal  officials  some  ele- 
mentary appreciation  of  telephone  conditions.     But, 
like  most   lessons   learnt   by   unwilling  pupils,   it  was 
learned  or  applied  the  wrong  way.     Instead  of  realiz- 
ing that  the  moral  of  all  this  confusion  was  the  natu- 
ral   and    perfectly   comprehensible    inability   of    Post 
Office  officials  to  understand  the  special  and  compli- 
cated problem  of  the  telephone,  the  official  came  to 
the  conclusion  that  what  was  wanted  was  more  instead 
of  less  of  Post  Office  control.     In  1905  they  accord- 
ingly forced  the  Company  to  agree  to  a  sale  of  its 
whole  interest  in  1911  at  "reconstruction  value"  with- 
out any  allowance  at  all  for  the  goodwill  of  its  enor- 
mous business.     Like  many  hard  bargains,  this  has 
proved  to  be  in  the  end  most  expensive  to  those  who 
made  it.     Once  the  certainty  of  appropriation  by  the 
Government  at  unremunerative  prices  began  to  over- 
shadow the  National  Telephone  Company,  the  develop- 
ment  of   the   system   was  paralyzed.     The   spirit  of 
enterprise  and  dash  which  characterized  the  early  his- 
tory of  the  Company  was  chilled ;  new  districts  were 
not  exploited  or  new  plant  fitted  except  where  abso- 
lutely necessary.     The  amount  of  capital  expendifnrr 
of  the  Company  decreased   from  over   1.000,00fU.   in 
1907  to  360,000/.  in  its  last  year.     Just  when  British 
telephony  was  beginning  to  recover  from  the  persist- 
ent difficulties  which  Post  Office  interference  had  put 
in  its  way,  the  final  blow  of  impending  Post  Office 
control  destroyed   for  a  decade  the  hope  of  an  arl- 
equate  exploitation  of  the  service  in  this  country.    The 
National  Telephone  Company,  always  uncertain  of  the 
security  of  its  title  and  hampered  by  the  enormous 
royalties,  amoiuiting  in  all  to  3,670,000/.,  that  it  was 
forced  to  pay  to  the  State,  had  never  been  able  to 
expand  on  generous  and   far-seeing  lines.     When   it 
was  faced  with  the  certainty  of  speedy  extinction  it 
ceased   to  make   any   eflfort  to  do   so.     The   service 
passed  into  the  hands  of  the  Post  Office  in  a  depressed 
and  depreciated  condition. 


It  cannot  be  said  that  the  Post  Office  made  any 
adequate  preparations  for  its  gigantic  task.  At  the 
time  of  the  transfer  Great  Britain  was  hopelessly 
behind  the  rest  of  the  world  in  the  provision  of  tele- 
phones. Whereas  in  Stockholm  one  man  out  of  every 
four  had  a  telephone,  in  Chicago  one  out  of  every 
nine,  and  in  Berlin  one  out  of  seventeen,  in  this 
country  in  London  only  one  out  of  every  thirty-five, 
in  Manchester  one  out  of  forty-seven,  and  in  Birming- 
ham one  out  of  seventy-two,  was  so  provided.  The 
system  was  obviously  inadequate  to  meet  the  expand- 
ing needs  of  an  industrial  community,  and  the  only 
possible  excuse  for  the  State  assuming  control  was 
that,  with  its  great  resources  and  absolute  freedom 
from  any  fear  of  competition,  it  might  be  able  to 
carry  out  the  necessary  revolution  more  swiftly  and 
easily  than  any  private  company.  But  in  order  to  do 
this  a  vast  army  of  highly  skilled  men  must  be  pro- 
vided and  the  plans  for  the  change  drafted  and  exam- 
ined by  experts.  Canvassers  would  be  required  to  seek 
out  business,  and  an  educational  campaign  to  instruct 
the  public  in  the  advantages  and  use  of  the  telephone. 
Nothing  of  the  kind  was  done  or  even  contemplated. 
.Ml  that  the  Post  Office  could  do  after  five  years  of 
oreoaration  was  to  take  over  the  existing  service 
without  dislocating  it  for  more  than  a  fortnight.  No 
skilled  men  were  trained  and  held  in  readiness  for 
the  needs  of  the  State  service.  Therefore,  instead 
of  the  transfer  being  a  stimulus  to  the  expansion  of 
the  telephone  ser\Mce  it  has  actually  acted  as  a  check. 
The  rate  of  expansion  as  shown  in  the  last  annual 
report  is  only  about  one-half  what  it  was  in  1906, 
and  even  so  it  exceeds  the  power  of  the  Post  Office  to 
cone  with  it. 

In  America  a  new  telephone  can  be  installed  in  four 
or  five  days,  whereas  in  this  country  it  will  take  as 
many  weeks,  and  in  some  cases  almost  as  many 
months.  The  Post  Office  authorities  quite  truly  say 
that  without  skilled  engineers  they  cannot  maintain 
and  extend  their  service.  But  that  is  a  difficulty  which 
anyone  might  have  foreseen.  What  I  object  to  is 
that,  knowing  that  skilled  and  trained  men  would  be 
required,  they  made  no  adequate  eflfort  to  ensure  that 
such  would  be  available  when  they  were  required. 
This  i'^  one  illustration  of  the  lack  of  foresight  which 
has  always  marked  their  attitude  towards  the  telephone 
service.    When  the  transfer  was  effected  they  got  rid 


of  the  highly  paid,  experienced  organizers  and  engi- 
neers at  the  head  of  the  service  and  substituted  for 
them  comparatively  ill-paid  officials  with  no  unusual 
telephone  experience.  I  have  nothing  whatever  to  say 
against  any  of  the  existing  officials.  Tiiey  do  their 
work  admirably  under  most  difficult  conditions.  But 
they  are  probably  not  selected  for  having  the  special 
talents  and  experience  which  are  required  for  running 
an  enormous  business  enterprise  like  the  telephone 
service. 

The  same  thing  applies  to  the  whole  internal  or- 
ganization of  the  service.  The  Post  Office  is  destroy- 
ing its  efficiency  by  trying  to  force  Civil  Service  meth- 
ods on  to  a  department  for  which  they  are  utterly 
unsuited.  It  is  not  usual  to  pay  a  Civil  servant  occu- 
pying a  certain  position  more  than  1500/.  a  year,  so 
the  Chief  Engineer  cannot  be  paid  more,  although 
the  National  Telephone  Company  paid  their  officials 
twice  the  sum.  That  is  the  Post  Office  argument. 
The  business  argument  is  to  get  the  best  man  and  then 
pay  him  what  he  is  worth.  So  with  the  rest  of  the 
staff.  Under  the  private  Company  they  were  system- 
atically promoted,  wherever  they  were,  so  that  every 
loyal  servant  of  the  Company  was  secured  a  rising 
income.  Now  all  sorts  of  grades  and  classes  have 
been  introducd  because  they  are  common  in  the  Civil 
Service,  and  a  telephonist  is  not  paid,  as  used  to  be 
the  case,  a  level  rate  according  to  the  work  done,  but 
a  rate  forced  according  to  the  particular  "classifica- 
tion" of  the  Post  Office  in  which  she  works.  More- 
over, it  is  generally  believed  among  the  staff  that  a 
judicious  mediocrity  and  scrupulous  observance  of 
red-tape  regulations  are  a  better  guide  to  promotion 
than  keenness  and  enterprise.  All  these  things  may 
be  small  in  themselves,  but  they  are  big  in  the  result. 
The  staff,  instead  of  being  happier  under  their  "model 
employer,"  the  State,  are  seething  with  discontent. 
Now,  the  telephone  service  is  run  by  the  nerves  and 
tempers  of  the  operators,  and  if  the  human  element  is 
dissatisfied  and  discontented  these  moods  will  inevit- 
ably be  reflected  by  the  machine  which  they  operate. 
Next  to  the  numbing  effect  of  Post  Office  interference 
in  the  past  must  be  put  its  stupid  misunderstanding 
of  the  feelings  of  the  staff,  in  assessing  the  blame  for 
the  present  breakdown  of  the  service. 

There  is  no  use  now  in  trying  to  shut  our  eyes  to 
the  facts.    During  the  whole  history  of  the  telephone 


in  England  the  Post  Office  has  acted  like  some  kind  of 
bad  fairy,  always  interjwsing  its  curse  just  when  the 
service  was  struggling  out  of  its  difficulty.  Impreg- 
nable within  its  walls  of  bureaucratic  obstinacy,  the 
Post  Office  will  accept  suggestions  from  nobody  nor 
heed  the  exasptrated  complaints  of  the  subscribers. 
There  is  only  one  possible  solution  of  the  difficulty. 
Post  Office  methods  have  dismally  failed,  and  they 
must  be  ended.  A  large  number  of  suggestions  have 
been  put  forward  from  time  to  time  for  the  reform  of 
the  service,  but  I  am  afraid  that  none  of  them  now 
are  adequate.  The  Chamber  of  Commerce  last  year 
pressed,  at  my  invitation,  for  a  separation  of  the  tele- 
phone from  other  departments  of  the  Post  Office,  so 
that  some  relics  of  the  old  independence  might  be 
preserved  from  the  stifling  effects  of  Civil  Service 
tradition.  The  Postmaster-General  would  not  hear  of 
it.  Then  the  Parliamentary  Telephone  Committee 
suggested  the  appointment  of  a  general  Advisory 
Committee  representing  the  subscribers,  with  much 
the  same  powers  of  advice  as  are  possessed  by  the 
Advisory  Committees  of  the  Board  of  Trade.  That 
also  was  refused.  Now  I  think  that  neither  of  these 
suggestions  is  adequate  to  meet  the  case.  Since  they 
were  put  forward  we  have  seen  more  of  the  methods 
and  ideas  of  the  Post  Office,  and  I  think  that  the  only 
possible  solution  of  the  whole  problem  is  to  take  the 
control  of  the  service  right  away  from  the  Post  Office 
and  place  it  under  a  board  of  business  men  who  will 
run  it  on  commercial  lines.  We  have  a  precedent  for 
such  a  body  in  the  Port  of  London  Authority,  and  I 
think  that  if  State  intervention  in  commercial  enter- 
prise is  to  be  increased  that  precedent  will  have  to  be 
extensively  followed.  Something  of  the  same  idea 
is  also  contained  in  the  suggestions  in  regard  to  Irish 
railways  put  forward  by  the  recent  Viceregal  Com- 
mission. 

The  present  arrangements  are  hopelessly  unbusi- 
nesslike. The  finances  of  the  system  are  involved  and 
obscure  to  a  degree  which  would  not  be  tolerated  in 
the  case  of  any  commercial  company.  The  National 
Telephone  Company  was  accustomed  to  issue  clear  and 
intelligible  accounts  a  fortnight  after  the  books  were 
closed.  The  Post  Office  issues  accounts  which  it  is 
impossible  for  any  man  who  has  not  had  a  special 
training  in  Treasury  accountancy  to  understand,  and 
they    are    not    debated    for    something   like    eighteen 


months  after  the  year  to  which  they  refer  has  expired. 
Even  when  the  time  comes  for  a  discussion  it  is  often 
farcical  in  character.  Last  year  the  Post  Office  never 
condescended  to  make  any  reply  at  all  to  the  criticisms 
that  were  directed  against  it.  This  year  we  were  more 
fortunate,  but  we  were  unable  to  obtain  from  the  Post- 
master-General any  real  information  as  to  how  the 
service  stands.  This  much  is  clear.  In  two  years  the 
Post  Office  has  already  managed  to  dissipate  the  sub- 
stantial profit  made  by  the  National  Telephone  Com- 
pany. The  Company  paid  a  royalty  to  the  State  of 
350.000/. ;  it  had  to  pay  income-tax  to  the  extent  of 
38,000/.  It  had  to  raise  money  in  the  open  market 
and  to  put  by  large  sums  for  the  redemption  of  capital. 
Yet  it  paid  six  per  cent,  to  its  shareholders.  Under 
Post  Office  control  the  profit  has  been  decreased  to  less 
than  one  and  a  half  per  cent.,  representing  a  total  net 
profit  for  the  year  of  only  303,000/,  although,  of 
course,  the  Post  Office  pays  no  royalties,  pays  no  in- 
come tax,  and  raises  money  on  the  full  security  of  the 
State.  That  is  a  record  from  a  financial  point  of  view 
which  amply  justifies  the  demand  for  the  more  busi- 
nesslike control.  A  business  board  would,  at  all 
events,  issue  intelligible  accounts  which  would  let  the 
subscribers  know  exactly  the  financial  position  of  the 
concern,  and  would  make  some  provision  for  allowing 
them  to  ventilate  their  complaints  with  some  prospect 
of  their  receiving  attention. 

At  the  present  moment  the  Post  Office  does  not 
realize  the  two  main  principles  of  telephonic  success. 
The  first  is  that  the  man  at  the  teleplione  is  a  man  in 
a  hurry.  He  may  consent  to  wait  for  any  other  pos- 
sible service,  but  he  never  will  consent  to  wait  for  the 
telephone.  For  him  every  second  is  a  minute  long 
because  every  second  may  be  of  vital  importance.  The 
Bell  Company,  in  America,  has  more  than  once  scrapped 
plant  worth  thousands  of  pounds  in  order  to  save  a 
few  seconds  on  a  call.  There  a  delay  of  a  quarter  of 
an  hour  in  a  thousand-mile  call  is  a  subject  for  special 
investigation.  Here  the  trunk  lines,  which  have  been 
for  years  under  the  control  of  the  Post  Office,  are 
notorious  for  their  slowness  and  untrustworthiness, 
and  excessive  charges  as  compared  with  the  Continent. 
As  an  instance,  the  trunk  fee  in  Germany  for  a  dis- 
tance of  300  miles  is  \s.,  in  England  it  is  2s.  6rf.,  which 
is  more  than  double  for  the  same  distance.  The  con- 
stant signal  of  "Line  engaged"  or  "Number  engaged," 


during  the  busy  parts  of  the  day  shows  that  the  de- 
ficiency of  lines  between  exchanges  is  almost  as  bad 
as  the  deficiency  in  trunk  lines.  Yet  the  Post  Office 
is  taking  no  adequate  steps  whatever  to  lay  down  the 
new  lines  that  are  necessary  for  the  speeding-up  of 
the  service.  A  business  board  would  recognize  that 
what  is  wanted  is  to  give  a  quick  service  when  it  is 
most  required,  in  the  busiest  time  of  the  day,  and 
would  rather  lay  down  trunk  lines  ahead  of  immediate 
requirements  than  allow  the  lack  of  them  to  hold  up 
the  service.  The  business  organizers  of  the  Bell  Tele- 
phone Company  have  now  got  in  stock  $25,000,000 
worth  of  reserve  plant  waiting  for  the  development  of 
the  service  to  require  it.  Even  in  the  City  of  New 
York  one-half  of  the  cable  ducts  are  empty,  in  expec- 
tation of  the  greater  city  of  eight  million  population 
which  they  expect  in  1928.  Money  invested  in  devel- 
oping the  service  is  well  invested,  since  by  the  second 
principle  of  telephony  every  extension  adds  value  to 
the  whole. 

The  future  of  the  telephone  service  in  this  country 
is  in  the  hands  of  its  subscribers.  They  are  a  .suffi- 
ciently formidable  body  to  enforce  their  will  upon 
any  Postmaster-General.  If  they  are  willing  to  put 
up  with  a  half-starved,  half-grown,  neglected  and  in- 
efficient service,  neither  cheap  nor  useful,  they  can 
abandon  it  to  the  bureaucrats  of  the  Post  Office.  They 
have  succeeded  in  losing  something  like  30,000,000/. 
of  the  nation's  capital  and  about  a  million  a  year  of 
its  income  in  running  the  telegraph  service,  and  I  am 
sure  that  they  may  be  equally  successful  with  the 
telephone.  But  if  the  subscribers  are  really  determined 
to  see  that  this  all-important  service  is  developed  and 
expanded  to  meet  the  needs  of  the  people,  and,  in  the 
picturesque  language  of  Mr,  Casson,  "fitted  like  a 
gannent  round  the  habits  of  the  people,"  they  will 
insist  that  the  evil  power  of  the  Post  Office  shall  no 
longer  be  exercised.  The  Postmaster-General  would 
retain  over  the  telephones  the  kind  of  suzerainty  that 
the  Home  Secretary  has  over  the  present  Prison  Com- 
missioners or  the  Lunacy  Commissioners,  but  no  more. 
For  the  first  time  in  its  history  the  telephone  must  be 
given  a  free  hand  over  the  whole  country,  unham- 
pered by  red  tape  or  official  restriction.  It  is  not  to 
be  supposed  that  such  a  change  will  be  efl'ected  with- 
out vigorous  official  opposition.  We  can  only  get  it 
by  acting  to  Parliament  the  part  of  the  importunate 


widow.    If  every  subscriber  who  has  got  a  complaint  country  with  the  muddle  and  inefficiency  of  the  Post 

will  badger  his  member  and  make  hiin  in  turn  badger  Office  system,  and  the  autocracy  of  its  methods,  is 

the  Post  Office,  the  Government  may  yield  to  weari-  '^  ^'^^^  "'^'  ''  ""'^  ""^^  ^  ''"'^  organization  to  make 

■    ,  ,,  •,,,,,  ,  ,  of  It  a  force  that  no  Government  could  resist 

ness  what  they  withheld  from  reason,  and  grant  the  V:  "     i,        • 

...  C  b.  Goldman, 

desired  concession.     Popular  disgust  throughout  the  Chairman  of  Parliamentary  Telephone  Committee. 


\ 


1 

^ 

•  c- 

^J 

0,C,2 

C\i 

W      w 

en    r-l 

_a  Uj 

O   u^ 

w  z^ 

^  <! 

• 

o     •> 

o 

;0 

O  :c 

^ 

1. 

.-^J4 

rH   rH 

o 

•    i. 

J3  :.^ 

a,  .i 

::!     * 

2 

a  t^ 

n,  CD 

o 

1 

T'    '-0 

-CTl 

ca 

y    0) 

-»->     w 

Ls. 

-'H 

:j:a: 

o 

' 

— •  J 

c    » 

t] 

<H 

35 

•d 

bi>«3 

Z 

^ 

^ 

C      ^ 
'^ 

d 

4^   m 

vs 

^^ 

a 

C   o 

> 

v^ 

o 

il     C 

^ 

J 

e    • 

s= 

Q. 

bo  Q, 

V 

<-t 

u    O^ 

V 

Q> 

i^':^ 

> 

iri 

i 

C3 

vJ 

a 

Vl  ; 

T^ 

a>  i 

"\~  ' 

N 

Ti    i 

<Ui 

U  '■ 

'  ^s»^^ 

$ 

ffi : 

< 

U 

a 

< 

jj 

^. 

University  of  Toronto 
Library 


DO  NOT 

REMOVE 

THE 

CARD 

FROM 

THIS 

POCKET 


Acme  Library  Card  Pocket 
LOWE-MARTIN  CO.  LIMITED 


/V, 


■■^^.,